Preamble

The House met at half-past Nine o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Mr. Nigel Spearing: On a point of order, Madam Speaker. There has been much publicity this morning about a Government announcement on sport. I speak as someone who was heavily engaged in sport for 14 years before coming to this place, as a coach and as a participant in spare and school time.
I understand that an announcement will be made outside the House at 11.30 this morning. Have you received a request for a Minister to make a statement at 11 o'clock? Up to what time can the Government make such a request if they change their mind and decide to make a statement? Are you aware that the money that will be the subject of the announcement is not public money, although some people might think that it is?

Mr. Dennis Skinner: Further to that point of order, Madam Speaker. I see that the Minister of State, Department of National Heritage is in the Chamber. It is conceivable that he might be able to say something about the matter raised by my hon. Friend the Member for Newham, South (Mr. Spearing) while he is dealing with the first Lords amendment to the Olympic Symbol Etc. (Protection) Bill. That would be inappropriate, however, because hon. Members would not be able to challenge the Minister as they would be able to do if he made a statement in the normal manner. We need an assurance from the Minister that he will make a statement at the appropriate time to tell us that lottery money will not be involved. If it were, the Government would be stealing money from the lottery, something that we suggested could happen a long time ago.

Madam Speaker: Order. I cannot allow a debate on a point of order. I take note of the remarks of the hon. Member for Newham, South (Mr. Spearing).

The Minister of State, Department of National Heritage (Mr. fain Sproat): rose—

Madam Speaker: I understand that the Minister wishes to respond.

Mr. Sproat: Thank you, Madam Speaker. Rather than taking up time during a private Members' day by making a statement, I thought that it would be for the convenience of the House to set out our new sports policy in a written statement, which I have done. The policy paper is in the Vote Office. Also for the convenience of the House, I understand that next week we shall have a full debate on the subject. That means that we shall have more time to debate the subject than would be available to the House if I were to make a statement today. I thought that it would be best for the House to debate the matter as fully as possible. I hope that, with that explanation, hon. Members will be satisfied.

Orders of the Day — Olympic Symbol Etc. (Protection) Bill

Lords amendments considered.

Clause 2

RIGHTS CONFERRED

Lords amendment: No. 1, in page 1, line 21, leave out ("section") and insert ("sections").

Mr. Nicholas Winterton: I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Speaker: With this it will be convenient to take Lords amendments Nos. 2, 12, 14 and 15.

Mr. Winterton: The House will be aware that the Bill makes provision for the use for commercial purposes of the controlled representations:
(i) the symbol of the International Olympic Committee, consisting of five interlocking rings,
(ii) the motto of the International Olympic Committee, 'Citius, altius, fortius', and
(iii) the words 'Olympiad', 'Olympiads', 'Olympian', 'Olympians', 'Olympic', 'Olympics'
and translations.
The Bill will give the person to be designated by the Secretary of State as the proprietor of the Olympics association right, the British Olympic Association, exclusive right to use the controlled representation during the course of trade. It creates a commercial property right that I would describe as a regime similar to that of the Trade Marks Act 1994 relating to registered trade marks, and will enable the BOA to raise revenue for British athletes for sponsorship with the benefit of statutory protection.
The Bill also gives effect to commitments made by the Government to the IOC to introduce legislation to protect the Olympic symbol, motto and protected words in the United Kingdom. Such statutory protection is a precondition of any future bid for the Olympic games in the United Kingdom. It is unfortunate that that protection did not exist when Manchester, a city close to my heart, made a bid, sadly unsuccessful, to host the games a few years hence.
On Second Reading my hon. Friends the Members for Hexham (Mr. Atkinson) and for Gravesham (Mr. Arnold) raised valid concerns about the scope of the Olympics association right and its application to small businesses such as pizza parlours, butchers, garages and restaurants which call themselves "Olympic". My hon. Friend the Minister of State, Department of National Heritage, whom I congratulate on his promotion, undertook to consider whether the bid affords sufficient protection to businesses whose use of a controlled representation could not be said to exploit an Olympics association. The amendments were moved in the other place by the Under-Secretary of State, Department of National Heritage, my noble Friend Lord Astor.
The House can feel happy that the Bill gives adequate protection to users of a controlled representation. Clause 4(9), (11) and (12) protect the right to continue the


existing use of the controlled representation for the purposes of an undertaking or as part of a business or company name. The proprietors of businesses referred to on Second Reading, such as "Olympic" restaurants, need have no concerns about the Bill.
Clause 4(6) provides that the Olympics association right is not infringed where one of the protected words is used in a way that does not create an association with the Olympic games or the Olympic movement or draw on qualities of speed, excellence, strength or other qualities that are associated with the Olympic games or the Olympic movement. Members of the Greek community who open small restaurants or florists may be able, on the facts of the case, to rely on clause 4(6) to defend an action for infringement by the proprietor of the Olympic association right by claiming that the use creates an association with their homeland and not with the Olympic movement.
The Secretary of State has power under clause 14 to give directions to the British Olympic Association with respect to the exercise of the Olympics association right. That is specifically intended to give a person who alleges that he was unfairly refused the right to use a controlled representation after the Bill comes into force, the right to approach the Secretary of State. However, there is scope for identifying those areas where it would be fair to allow someone to use a controlled representation so as to avoid the burden of persons having to apply to the BOA for its use or risk inadvertent infringement of the Olympic association right.
The Lords amended the Bill to allow the Secretary of State, by order made by statutory instrument, to provide that certain categories of uses of a controlled representation would not constitute an infringement of the Olympics association right.
If the Bill is enacted, the Secretary of State, with the assistance of the British Olympic Association, will seek to identify areas in which use of a controlled representation may properly be allowed without at all jeopardising the British Olympic Association's commercial interests. It is difficult to anticipate where the need may arise, but the provision is broad enough to allow the Secretary of State to permit uses of a controlled representation.
For example, he could permit the use for the purposes of new subsidiary companies of established companies; in the incorporation of a company under its former business name; for the purpose of a certain class of business, for example florists or small restaurants; and for specified trade uses for the purpose of an undertaking. For example, that would cover use in a campaign against the Olympic games, an issue that was mentioned by the hon. Member for Brent, East (Mr. Livingstone) on Second Reading.
The amendments will enable the Secretary of State to authorise fair and non-exploitative uses of controlled representations such as those cited by hon. Members on Second Reading. The amendments are entirely acceptable to me as the sponsor of the Bill. They improve the measure and I commend them to the House.

Sir Hector Monro: I declare an interest as I am a member of the British Olympic Association and I

have been Minister for Sport three times in my career. This is an important day for sport and it is appropriate that such a Bill is being debated. The amendments will make an already good Bill an excellent one.
The important point to bring home is that the Bill will give sport an important future opportunity. Later today, we shall be able to consider the announcement by my hon. Friend the Minister with responsibility for sport about developments for England and Wales, while the Under-Secretary of State for Scotland, my hon. Friend the Member for Aberdeen, South (Mr. Robertson), will deal with developments in Scotland. Sport will be debated next week and that is important because we have few opportunities to debate it. The country will welcome that debate.
The amendments tidy up an important section of the Bill, which we all support. I have the highest regard for Mr. Craig Reedie, the chairman of the British Olympic Association. It will welcome the amendments because they clarify the Bill and remove any worries about the original drafting curtailing personal interests. The Bill, whose sponsor is my hon. Friend the Member for Macclesfield (Mr. Winterton), is supported by a large number of hon. Members in all parts of the House. I wish it well.

Mr. Peter Luff: It is a privilege to follow my hon. Friend the Member for Dumfries (Sir H. Monro). I understand that that was his first Back-Bench speech since his resignation from the Government. He gave distinguished service in government, and it is a privilege to follow him.
It is important that the House always seeks to stand up for the rights of the weak against potential exploitation by the strong. I suppose that that is what is at the heart of my continuing nagging concerns about the Bill and the amendments, especially amendment No. 12, a new clause that seeks to address concerns that were expressed on Second Reading. The other amendments in the group are consequential on that amendment.
I suspect that most hon. Members who take part in the debate will pay tribute to my hon. Friend the Member for Macclesfield (Mr. Winterton) for introducing the Bill, and I join them in that. He has done a great service to the House and the Olympic movement and I hope that the Bill will make speedy progress to the statute book.
I regret that I shall have to speak at greater length than I had hoped, because I was unable to contact the British Olympic Association during the week to discuss my concerns with them in person. That was for the entirely understandable reason that most of its senior members were at the European youth olympics in Bath. I am delighted to see from today's edition of The Daily Telegraph that Britain's under-18 hockey team came from behind to beat Ireland 3–2 in the final yesterday. We urge our athletes on to great success in Bath.
I declare a kind of interest in the debate because I am an adviser to Visa International, which is a major sponsor of the Olympic games internationally. However, I make it clear that I have not discussed this matter with Visa and I do not know its views on the Bill or the amendments. My suspicion, however, is that, like any commercial sponsor of the Olympic games, sponsors would welcome both the Bill and any amendments that sought to clarify the way in which these powers can be used, because it is clearly important for sponsors to ensure that their


sponsorship is protected. It is not just a question of protecting the rights of the Olympic movement or of the British Olympic Association. It is also very much a matter of ensuring that we protect sponsors' rights, otherwise that sponsorship will not be forthcoming. We have heard from my hon. Friend and in speeches in another place of the importance of those funds for Britain's athletes.
I want to make it clear that, in raising my concerns today, I share the basic support for the Bill's general thrust. Any additional assistance that is forthcoming to Britain's athletes, wherever they take the international stage, but particularly when it comes to the Olympics, is welcome, but how we fund the British Olympic Association raises important questions, and we must ensure that our athletes' rights to have adequate funds for their performances overseas are balanced against the need to safeguard the interests of this country's commercial organisations. My concern is whether the new clause and the group of amendments go far enough to protect their interests.
It is interesting to note in The Daily Telegraph today that the Sports Council has announced additional funding—another £1.25 million—for Britain's athletes competing at the 1996 Olympic games in Atlanta, but I note that a spokesman for the Sports Council says that that money
doesn't fully bridge the gap but I hope the lead that we've given might persuade some commercial organisations to do something.

Madam Deputy Speaker (Dame Janet Fookes): Order. The hon. Gentleman is trying my patience somewhat. What has that to do with the amendments under consideration?

Mr. Luff: I am trying to explain the importance of ensuring that the rights of this country's organisations are absolutely protected. Let me explain more. We could be gathered up in a great feeling of good will towards the Olympics and our athletes without considering carefully enough and in sufficient detail the direct impact of the Bill on the organisations that we need to ensure are protected, particularly small businesses.
I have heard many reassurances from my hon. Friend the Member for Macclesfield during his opening remarks. I want to raise some additional concerns and I should like to hear those same reassurances from my hon. Friend the Minister to ensure that those organisations are properly protected. I was simply seeking to set the picture about the Bill's importance and to reassure the House that I in no way wished to undermine the effectiveness of the Bill, whose importance I genuinely understand. I share the view that my hon. Friend the Member for Macclesfield expressed about that.
My concern about the amendments is born simply out of the concern to protect the Bill's impact on some specific commercial activities. In another place, we heard Lord Brabazon of Tara express his support for the Bill in almost evangelical terms. My concern is that, because we are so anxious not to undermine the Bill's effect, we do not give the amendments sufficient scrutiny and ensure that they have the right impact and that they are the right amendments. On reflection, I wish that I had tabled alternative amendments that would have met my concern.
Commerce has rights too, as my hon. Friend the Member for Hexham (Mr. Atkinson) said during his excellent Second Reading speech, which prompted, as I understand it, my hon. Friend the Minister of State and his

right hon. Friend the Secretary of State to bring forward amendments to this Bill in another place. I understand that this group of amendments attempts to deal with those concerns, but I have a number of worries about it.
The powers that we are giving to the Secretary of State to act in respect of those concerns seem to be clumsy and discretionary. They rely on the use of statutory instruments. I worry that the Government will be prepared to bring forward a statutory instrument for consideration by this House only if commercial interests' concerns are extremely clear cut. Frankly, I am also concerned that there may be a certain reluctance in the Department of National Heritage to exercise those powers at all, so I am looking for a reassurance from my hon. Friend the Minister of State that there will be a genuine determination by his Department to use the powers that this new clause will give him.
We have to be careful when we give powers to bodies that are outside the control of this House and make certain that the House has adequate powers of redress if those powers are misused. Earlier this week, I spoke on the Charities (Amendment) Bill. We were doing a similar thing with the charity commissioners. My hon. Friend the Member for Macclesfield has been consistently concerned about the powers that we hand to the European Union when the House is not able properly to control those powers. He is right and it is understandable to have those concerns. My concern, however, is that we are debating this new clause only because the Bill is a trifle over-ambitious. Will he consider—I think that procedurally it is now impossible—my preferred route forward, which is slightly to reduce the Bill's ambitious nature?
I fully understand that the Olympic movement's symbols are effectively trademarked as the most powerful protection, but other organisations use them in a variety of formats. The Public Relations Consultants Association uses them in an extended format on the front page of its annual report. Can it look to the powers in the new clause to ensure that its historic use—I have the report here and I shall show it to my hon. Friend the Member for Macclesfield—will not be caught by the Bill's powers?
I understand the need to protect the motto of the Olympic Association but I suspect that this new clause will really come into effect when we debate the use of specific protected words in this Bill. This is where the real difficulty comes and where my concerns lie. I have no problem with the Bill protecting "Olympiad" and "Olympiads" because I understand that they are specific terms, used only in connection with the modern Olympic games. Similarly, I understand that the word "Olympics" relates entirely to the Olympics games. That is reasonable. For me, however, the problems come with other protected words, especially "Olympian", "Olympians" and "Olympic". We must be careful about constraining the use of words that have more general, historic and geographical connotations. I suspect that this is the way in which we will look to the Secretary of State to exercise his powers under the new clause if it is accepted by the House today.
I come from Worcestershire. I worry what would happen if we gave Lea and Perrins the power to control the use of the words "Worcestershire" and "Worcester" in relation to sauce, or if we gave Royal Worcester Porcelain the power to control the use of "Worcester". Although I have enormous admiration for those two companies.
I would speak against any attempt to do so. It is right that we should express our concern about the power that we are giving the British Olympic Association to control the use of those two words and that we assure and satisfy ourselves absolutely that, under this new clause, my right hon. Friend the Secretary of State will have adequate powers to deal with an over-mighty use of these words by the BOA.
I shall not weary the House with precise definitions of those two words, but it is worth remembering that all the dictionaries that I have considered give a wide variety of meanings, both for "Olympian" and "Olympic" which go well beyond the Olympic movement. The first definition of "Olympian" given in the dictionary is:
Of or belonging to Olympus; heavenly, celestial.
Again, the first definition of "Olympic" is:
Of or belonging to Olympus
the place. Those are matters of history and geography, not just games.

Mr. Michael Fabricant (Mid-Staffordshire): Surely my hon. Friend's points do not apply to any use of the words if they will not be confused with the aims of the British Olympic Association: to provide teams and compete in the Olympic games. He gives examples about Worcester sauce and Royal Worcester Porcelain and comments that he would defend the use of the word "Worcester". Surely he would argue that, if someone came along and produced a Worcestershire sauce in competition with Lea and Perrins, it would be wrong and in breach of the law, but if someone were to produce a Worcester soup or something similar, which has nothing to do with the original product, it would not be a breach? Similarly, the point is that these amendments from another place make it clear that his concerns would not apply because restaurants and others have nothing to fear. The amendments protect only the British Olympic Association from other organisations that might take funds away from it in relation to the Olympic games.

Mr. Luff: I hear what my hon. Friend has to say and I shall not be drawn into the debate about Worcester sauce, which has real problems about copyright around the world, but some remarks were made in another place during the debate about the effect of the new clause which give me a scintilla of doubt that his confidence is accurate.
I know that my hon. Friend the Member for Hexham got into a certain difficulty at Second Reading by giving examples of the use of those words by current businesses in a London telephone directory, one of those rare occasions when reading the telephone directory for the record was probably in order. I do not intend to do so today but I have considered those and I see that a number of companies have chosen to use those words because they believe it is useful in their business activity. My concern is that, although my hon. Friend the Member for Macclesfield discussed grandfather rights, where a company already uses the word, there may be a real desire by the BOA to prevent new companies that also think that there will be a benefit from using this word when establishing themselves. I seek that particular reassurance from my hon. Friend the Minister.
On Second Reading in the other place, Lord Astor—the then Minister—set out the Government's position clearly. Lord Brabazon, in reply, expressed severe reservations

about accepting the amendment we are now debating. Indeed, he expressed disappointment that there should be any amendments at all to the Bill. I wonder what briefing led him to that view. Did the BOA express concern about the amendment and suggest that it might constrain its power to act to protect its sources of income?
10 am
I recognise that clause 4 provides a number of protections, as my hon. Friend the Member for Macclesfield (Mr. Winterton) rightly pointed out in his speech. However, what concerns me is that Lord Brabazon referred to the new protection offered by amendment No. 12—the new clause—as a power that he hoped would be used as an exception rather than a rule. The amendment seems to have been offered rather grudgingly by the Bill's sponsor, who hopes that it will not be used. I suggest that it is a power that needs to be used, possibly quite freely.
I am aware that my right hon. Friend the Member for Dumfries is a member of the BOA. My difficulty is that the BOA, rightly and properly, has as its primary objective the promotion of sport. Those who will exercise the powers in the Bill have a strong sporting bent; they are not commercial individuals whose job is to protect the commercial base of the country. One of them, I am pleased to note, is the former physical education teacher at my old school, Windsor grammar. However, in general, and having looked in detail at the curriculum vitaes of those who will exercise the Bill's powers, I have no confidence that their prime purpose will be to protect commerce; it will, of course, be to protect sport. That is why we need the additional powers given to the Secretary of State in the new clause. I accept that the individuals concerned at the BOA are trustworthy people, but they are not very commercial. Their first priority is bound to be sport.
I am doubtful whether we even need the Bill at all, given that the BOA says in its documentation that its primary tool for raising funds for athletes is not the words and symbols that will be protected by the Bill, but its own marketing symbol that unites the Olympic symbols with the union jack in a roundel. It describes its need to protect that symbol as its principal way of raising commercial revenues. The BOA does not directly exploit Olympic symbols, words and phrases, just its own adaptation of them. That is why it is so necessary that the new clause should give the Secretary of State adequate powers to protect commercial interests from the BOA's unreasonable use of its power.
There is another point about who should exercise the powers in the new clause. As I understand it, it will be the Secretary of State for National Heritage. I understand that because the Bill is about sports men and women. However, as the new clause is designed not to protect sports men and women, but to protect commercial interests, it might be better to give the power to a different Secretary of State than one whose prime motive, honourably exercised, is to protect sports men and women. It might be more appropriate to give the power to the President of the Board of Trade or even the Deputy Prime Minister, given that he now has responsibility for competitiveness and deregulation. Their motives in exercising the power would be rather different from that of the Secretary of State for National Heritage. They will be concerned to protect the individuals whom I understand the new clause exists to protect.
I am looking for a number of specific reassurances. Given that the powers will be exercised by the Secretary of State for National Heritage, can my hon. Friend the Minister assure me that they will be exercised in a pro-enterprise way and that the Department will not uncritically accept the views of the BOA? Will the Secretary of State consult her colleagues in Government before exercising the powers to ensure that the BOA is right in resisting any particular application for the introduction of a statutory instrument under the new clause?
I think that my hon. Friend the Member for Macclesfield has already assured us that grandfather rights will be properly protected. Companies operating in or around my constituency already use words or phrases that are protected by the Bill. They may want to expand and set up new subsidiaries. I think that my hon. Friend gave me the assurance that they will be free to do so. However, I want my hon. Friend the Minister to give that same reassurance from the Dispatch Box, so that it has the necessary statutory force.
I also want an assurance that there is no way in which the BOA could use the powers in the Bill to do anything other than protect the literal words. The word "Olympia" is not protected by the Bill. The word "Olympic" is often used to describe size. For example, a local authority may describe its swimming pool as "Olympic-sized". I do not think that the BOA should expect a royalty payment from a local authority every time it described its own swimming pool in that way. Is that an example of the sort of matter that could be covered by a statutory instrument laid under the new clause?
I am left with the uncomfortable feeling that the Bill is cumbersome and complex when it should be quite simple. That sort of thing always sets off alarm bells in my mind. I wonder whether it could not have been more simple. I hope that the powers in the new clause are adequate to deal with the concerns that have been expressed both here and in the other place. I look forward to hearing my hon. Friend the Minister's response.

Mr. Fabricant: While my hon. Friend the Member for Worcester (Mr. Luff) was speaking, I took the opportunity to pop out and look at a copy of Yellow Pages. However, I resisted the temptation to bring it into the Chamber, as happened on Second Reading—although at that time it was entirely appropriate to do so. I wanted to see whether there were any companies using the words "Olympiad", "Olympiads", "Olympian", "Olympians", "Olympic", "Olympics", and so on as listed in the Bill, that might conflict with the amendments. There were none. All businesses using such word were concerned with photocopying, restaurants, florists and other such activities.
Indeed, that fact was mentioned by my hon. Friend the Member for Macclesfield (Mr. Winterton), whom I congratulate on taking the Bill through its various stages. It is clear that there need be no scintilla of doubt, as expressed in the other place, about the Bill's intentions. I do not envisage the possibility that companies such as those listed in Yellow Pages using the name "Olympic"—even if they are new companies using that name, as existing companies are already protected—would be affected by the Bill.
The whole point of the Bill is to protect the British Olympic Association. This debate is especially interesting for me because I serve on the National Heritage Select

Committee and one of the areas we are currently investigating is Olympic bids in the United Kingdom and elsewhere. Hon. Members may be interested to know that the Select Committee recently went to Barcelona to examine how the Spanish attracted the Olympic games to their country in 1992. What soon became apparent was the importance of the Olympic symbols for use by their local Olympic committee to raise money for local athletes. After all, is not that what the Bill is all about? Surely it is intended to ensure that there will be adequate funding for the British Olympic Association to send teams to Atlanta. The Select Committee will be going to Atlanta this summer to investigate how it attracted the Olympic games.
Indeed, we need to question whether it is even worth trying to attract the games to the United Kingdom. Given that Manchester spent a great deal of money on its Olympic bid but received only seven votes, we must question whether it is worth competing and whether it is worth the games coming to the United Kingdom.

Mr. Nick Hawkins: As the chairman of our party's sports committee, and as today I have the honour to wear the Olympic bid tie for the Manchester bid, I have to tell my hon. Friend that although I agree with a number of his points about the amendments, the Manchester bid was enormously important in terms of increasing confidence in Britain as a whole and in the north-west in particular. The city of Manchester has benefited enormously from its Olympic bid.

Mr. Fabricant: My hon. Friend the Member for Blackpool, South (Mr. Hawkins) makes an interesting point. I would not wish to prejudge the findings of the National Heritage Select Committee. Before you rightly tell me off, Madam Deputy Speaker—I am rather drifting away from the amendments—I invite my hon. Friend, who has played an active and important role on the Back Benches as chairman of the Conservative sports committee, to attend the National Heritage Select Committee meeting when we interview the gentlemen from Manchester. They will include, I believe, Sir Robin Scott—

Mr. Gyles Brandreth: Sir Robert Scott.

Mr. Fabricant: Yes, Sir Robert Scott, who led the Manchester bid. Robin Scott is a previous controller of BBC Radio 1.
I have no reservations about the amendments. They strengthen the Bill. I accept to some small degree the point made by my hon. Friend the Member for Worcester (Mr. Luff) that the use of statutory instruments may be a clumsy way of making amendments. In practice, I cannot see why statutory instruments would be needed because, as has been plainly pointed out already, there are so many industries that use the terms and symbols involved which cannot be confused with the aims of British Olympic Association and therefore would not be diverting money away from it.
I want this country to succeed at the Olympic games. We invented so many sports which are not in the Olympic games such as cricket, football—I am not sure whether football is in the games, but I think not—and tennis. We invent sports but do not seem to succeed in them. That is why I was so delighted with this morning's news and


delighted to see my hon. Friend the Minister on television this morning talking about the Prime Minister's £100 million to promote sport in the United Kingdom. If East Germany could win so many gold medals with a population of only 18 million, how come a nation of 58 million active and fit people, as we are, is so unable to win Olympic medals in such profusion?
I support anything that can be done to promote the BOA and sport. I believe that the Lords amendments will strengthen not weaken the Bill.

Mr. Peter Atkinson: I join in giving a cautious welcome to the amendments although I share many of the reservations that my hon. Friend the Member for Worcester (Mr. Luff) outlined.
When we last debated the issue, one or two Opposition Members who are not in their seats today accused me of filibustering to delay progress in debating a subsequent Bill. That allegation was set in stone by the BBC on television news that night and prompted some 600 letters to me, mostly abusive and some containing more than letters. However, that is part of the life of a politician.
It may not have been a spectacular Bill or one that caught the headlines like the Bill discussion of which was to have followed, but it was nevertheless very important both for the British Olympic Association and for the many small businesses who use the name or similar names and who were—and still are to a degree—concerned that their businesses could be affected by the legislation. It was that concern, which was referred to by my noble Friend Viscount Astor in another place, that prompted the Government to introduce the amendments, which, I believe, go some of the way towards meeting those concerns.
It is quite wrong that Bills are simply nodded through the House. It is wrong that we should rubber stamp Bills and leave it to their Lordships to sort them out later. That is wrong and an abuse of the House. When Bills come before the House, we have the right to debate them even if they are less interesting and headline-worthy that those that appear subsequently on the Order Paper. It is the luck of the draw on a Friday.
I seek the assurances that my hon. Friend the Member for Worcester asked for because I share some of his concern that we have a rather awkward system in which the Secretary of State, in negotiations with the British Olympic Association, will determine whether the use of the word is in breach of what is being proposed. With that guarded welcome, I congratulate my hon. Friend the Member for Macclesfield (Mr. Winterton) on the Bill. I am sure that now that the wrinkles have been ironed out it will be very valuable asset to the Olympics and our Olympic teams.

Mr. Tom Pendry: I intervene briefly to say that I think this is a very important day for the British Olympic Association. I am not referring to this glossy document, "Sport: Raising the Game", which we will no doubt be able to debate on Wednesday, as the Minister said. We shall see whether it is important for the Olympic movement then.
This Bill is the end of a very long road. Over the years, many of us have made representations to bring such legislation before the House. Indeed, in November last year, the Prime Minister wrote to me to say that he would introduce legislation as soon as parliamentary time allowed. We all know what that means. It is therefore very good that the hon. Member for Macclesfield (Mr. Winterton) took the initiative to bring the Bill before us and I think that it is going to be a very important piece of legislation.

Mr. Nicholas Winterton: May I publicly thank hon. Members on both sides of the House for the support that they have given to the Bill? I pay particular tribute to the hon. Member for Stalybridge and Hyde (Mr. Pendry) for his interest and the initiatives that he has sought to take in the past. This has been an all-party Bill. I am its sponsor but I pay tribute to the support that I have had from all political parties for the purpose and objectives of the Bill.

Mr. Pendry: I thank the hon. Gentleman for that.
The Lords amendments to the Bill clearly provide means by which any possible problems which might arise in the future can be dealt with. The new clause created by amendment No. 12 provides the means by which the Secretary of State could deal with problems by order without the need to return to the House and that should help with unforeseen problems, such as the case of the Olympians.
I am glad that assurances have been forthcoming to the effect that the Olympians in particular will be able to continue using the Olympic symbol. It is a group with altogether altruistic aims representing our community of past Olympic athletes and embodying all that is good about the Olympic spirit and the Olympic family. Under the leadership of Liz Ferris, it continues to encourage fair play in sport and is a valuable source of information and advice and it assists the BOA.
I wish to place that on record, because I am grateful that the Minister has given that guarantee within the context of the Bill. I hope that the amendments are carried, because they certainly make the Bill an even better Bill than it was when it first began its passage in the House. As I said at the start, this is a very good day for the BOA.

Rev. Martin Smyth: I welcome the Bill and support my hon. Friend the Member for Macclesfield (Mr. Winterton). I congratulate him not only on sponsoring the Bill, but on including Northern Ireland in it. It affects us, too, and I share his tribute to the hon. Member for Stalybridge and Hyde (Mr. Pendry), because I know the role that he played when he was at the Northern Ireland Office, and his subsequent role in the realm of sport.
I long to see the day when our middle-distance runners will again top the field rather than lagging behind. I hope that next week's debate on sport will offer some light not only for Scotland and Wales but for Northern Ireland in the context of raising standards.
The hon. Member for Worcester (Mr. Luff) referred to Lord Brabazon speaking in an evangelical manner. I am not sure whether the hon. Gentleman meant evangelical or evangelistic. It was the hon. Member for Worcester who spoke with evangelistic fervour. While he spoke with a quiet voice, he reminded me of the evangelistic preacher who started shouting because his notes said, "Argument


weak, shout like hell." The arguments against the Bill were rather weak, and I look forward to it going through with the full support of the House.

Mr. Brandreth: I welcome the amendments but must do so in a subdued mood because of the sad and unexpected news of the death yesterday of my predecessor as the Member of Parliament for City of Chester. Sir Peter Morrison was Chester's champion for 20 years. There are three Cheshire Members of Parliament here today, and I know that they will join me in paying tribute to Sir Peter and in sending condolences to his family.
This is an important day for sport in the United Kingdom. The Bill is a small but important measure. I take this opportunity to salute my hon. Friend the Minister of State, because of all that he is doing to reawaken sport not only at the heart of school life but throughout our culture. We are going to breed Olympic champions in the United Kingdom, and I honestly believe that future generations will look back on the summer of 1995 and think of my hon. Friend the Minister and of the Prime Minister, who together are leading us into a new era of British sport.
The Bill is full of good sense. I think that the fears expressed by my hon. Friend the Member for Worcester (Mr. Luff) are unfounded. He will find that, when the Bill becomes an Act, common sense will prevail and that the new clause—or amendment No. 12—will be a useful moderating mechanism.
I am delighted to welcome the amendments and the Bill and excited to think that the Bill will be in place when the Olympic games come to Manchester, as they must, and when all the gold medals are won by true Britons, thanks to the leadership shown by our outstanding Prime Minister and the Minister of State.

The Minister of State, Department of National Heritage (Mr. kin Sproat): I shall first make one or two general remarks about this group of amendments and then deal with some specific points on which hon. Members asked for reassurance and with those made so lucidly and forcefully by my hon. Friend the Member for Macclesfield (Mr. Winterton).
My hon. Friend the Member for Macclesfield spoke clearly about the protection that the Bill gives to legitimate businesses users of a controlled representation. No one should be in any doubt—the Bill is not an anti-business measure. I shall deal in a moment with the related points that my hon. Friend the Member for Worcester (Mr. Luff) quite properly raised, but I give that general assurance at the outset.
The Bill protects genuine property interests in the controlled representation and gives the British Olympic Association statutory protection for what are, in effect, its trademarks, alongside any common law remedies that it may have. Those who need fear the Bill are those who seek to trade on the reputation of the Olympic games by making money for themselves and depriving the BOA of its life-giving revenue.
It may be helpful if I draw the House's attention briefly to further protection for users of a protective word. Protected words are "Olympiad", " Olympiads", "Olympian", "Olympians", "Olympic" and "Olympics" and their translations. Unlike the exceptions in clause 4(10) to 4(14), they do not depend on existing use at the time the Bill comes into force.
Although I do not agree, hon. Members seem to think that what is said at the Dispatch Box has more force that what is said elsewhere. I am therefore happy to say that clause 4(7) provides that, in the case of the representation of a protected word, the Olympics association right is not infringed by use which creates an association between the Olympic games or the Olympic movement and any person or thing where the association fairly represents a connection between the two, provided that the use is in accordance with honest practices in industrial or commercial matters. Examples of use that might be justified under this clause are an Olympic champion who endorses sports equipment as an "Olympic champion" and a hotelier who advertises accommodation within five minutes' walk of an Olympic games venue. It will also cover incidental reporting of anything to do with the Olympics in day-to-day trade. After all, the Olympics are public events and it is not possible to prevent businesses from making references to them.
Such use, however, would need to be a fair representation of an existing connection. The clause does not, for example, permit a manufacturer to claim that his products have been endorsed by the BOA or the Olympic movement at large if they have not. Likewise, a supplier of widgets could not claim on the basis of a simple supply agreement with the BOA that he is "the" supplier of widgets to the BOA.
Furthermore, the clause 4(7) defence should be available only when the use is in accordance with honest practices in industrial or commercial matters. Among other things, that restricts what is known in the marketing business as "ambush marketing". An example of that would be if the BOA officially endorsed a sportswear manufacturer's products and a rival manufacturer ran an advertising campaign using former Olympic champions in order deliberately to counter the benefits of official endorsement. That is not an honest commercial practice, and anyone who undertakes such an advertising strategy will receive no help from this clause.
My hon. Friends the Members for Worcester and for Hexham (Mr. Atkinson) are entirely right to say that, even where there is a genuine consensus in the House—as there certainly is in this case—it is not only right but essential that a certain healthy scepticism should be brought to bear on any legislation. I am sure that every hon. Member can think of a number of Bills that were not subject to healthy scepticism or explored sufficiently in the House, and regret that such legislation was too hastily passed. Although I hope that I can provide proper and adequate reassurances for my hon. Friend the Member for Worcester, it is extremely important that such matters should be explored.
My hon. Friend spoke of the importance of the funds for sportsmen that will arise from the Bill; that is at the heart of the Bill. I was glad to hear the reference to the Sports Council's further grant of £1.25 million to the Sports Aid Foundation precisely to help our Olympic athletes in their preparation. That is exactly the sort of provision that is either supplementary to, or supplemented by, the provisions in the Bill.
A number of hon. Members, including my right hon. Friend the Member for Dumfries (Sir H. Monro), mentioned the sports policy paper which the hon. Member for Stalybridge and Hyde (Mr. Pendry) waved before us. Incidentally, I thank the hon. Gentleman for that free publicity. One of the main purposes of the policy paper is


to do on a larger scale what the Bill seeks to do on a lesser scale, which is to inject more funds into British sports. It is therefore particularly appropriate that we are considering the Bill on the very day that the Government have announced their wider provisions to inject more money into sport at school level and at the championship and elite level.
My hon. Friend the Member for Worcester sought an assurance that legitimate businesses would not be damaged by the Bill. I can give him that assurance. We shall certainly use the powers that we have under the new clause 12. Appeals can be made to my right hon. Friend the Secretary of State if a business feels that it is being damaged because it believes that the BOA is unfairly and improperly using the powers that the Bill gives it. In that case, the business can appeal to my right hon. Friend who will make a decision.
My hon. Friend was also worried that there might be instances in which my right hon. Friend the Secretary of State for National Heritage could be thought to be more in favour of the sporting than the enterprise aspect of a case and that, if so, that matter should perhaps be put to another Secretary of State, perhaps the President of the Board of Trade or my right hon. Friend the First Secretary of State. Of course, that can be done because, as the House knows, the term "Secretary of State" in a Bill can refer to any Secretary of State. Although, in this context, it would normally be the Secretary of State for National Heritage, it would be easy for the matter to be taken to another Secretary of State, and the Government will decide what is appropriate. That should ally my hon. Friend's fears.
My hon. Friend also asked whether pro-enterprise considerations would be taken fully into account. The answer is yes. The reference to the Secretary of State means any Secretary of State, so it could be the President of the Board of Trade. He asked whether grandfather rights were covered, and the answer is yes. I give my hon. Friend those specific yes, yes, yes assurances.
10.30 am
My hon. Friend the Member for Mid-Staffordshire (Mr. Fabricant) told us—I did not know—that the much-travelled Select Committee on National Heritage proposes to go to Atlanta. I say, not as a joke, that that will be extremely valuable to the Olympic movement, to the British Olympic Association, to the House and to the new United Kingdom Sports Council when it is established on 1 January next year. One of its specific remits is to attract to Britain top international sporting events, of which the Olympic games is possibly the biggest in the world. Therefore, to see exactly how Atlanta did it and what are the costs to that city will be extremely useful. As the youth games at Sheffield produced a pretty big debt burden on the backs of the city fathers for many years to come, it is important that we examine closely all Olympic-related matters. I shall value not only my hon. Friend's personal view when he returns from Atlanta, but the considered views of the Select Committee in summary.
My hon. Friend the Member for Mid-Staffordshire said that he was in favour of anything that could be done to support sport. He will know that today we are producing a sports policy paper which announces massive injections

of money into sport from a number of different sources and the House will have a chance to consider it at greater length next week.
My hon. Friend the Member for Hexham made a valuable contribution to the Second Reading debate. He was treated extremely unfairly and I very much hope that the BBC will remedy the way in which it treats hon. Members. No doubt unwittingly, it grossly misrepresented the point that my hon. Friend made, as is proven by the fact that we are debating it today. By raising the matter, he caused my Department to decide that something must be done to clarify it, and that is why, for one valuable hour this morning, we discussed that important principle. I pay tribute to the healthy scepticism of my hon. Friend.
The hon. Member for Stalybridge and Hyde has had much to do with these matters in the past. I certainly echo the thanks expressed to the hon. Gentleman by my hon. Friend the Member for Macclesfield. Although I am absolutely certain that, when our marvellous sports policy paper will be discussed at great length next week, the Labour party will find one or two tiny points with which it does not wholly agree, nonetheless I am grateful to the hon. Gentleman for his genuine support. He is right to exhibit that healthy scepticism that I call upon the House to exhibit towards others—even towards me. I look forward to next week's debate and I genuinely thank the hon. Gentleman for his supportive attitude.
My hon. Friend the Member for Belfast, South (Rev. Martin Smyth) welcomed the fact that the Bill will apply to Northern Ireland. I agree with him. He will know from my actions that I believe strongly in that principle. When I constructed the United Kingdom Sports Council, partly out of the old Sports Council, for the first time I specifically included a representative from Northern Ireland, as it is extremely important that Northern Ireland is seen to be part of the United Kingdom is every possible way. That includes sport, and that is why it is in the new United Kingdom Sports Council.
My hon. Friend the Member for City of Chester (Mr. Brandreth) gave the House some very sad news that I certainly did not know. Judging by the response of other hon. Members, most did not know about the sad death of Sir Peter Morrison, who had been a friend to many of us for many years. I should very much like to join all hon. Members in the condolences that my hon. Friend will pass on to Sir Peter's family.
I welcome Lords amendments Nos. 1, 2, 12, 14 and 15 as general deregulatory measures which will lift from identified classes of business that do not qualify for exception under clause 4 the burden of applying to the BOA for consent to user control representation. I congratulate my hon. Friend the Member for Macclesfield on the way that he has made his case this morning and on his persistent dedication and good humour in the face of some dilatory frustrations. I welcome the amendments and commend them to the House.

Lords amendment agreed to.

Lords amendment No. 2 agreed to.

Clause 4

LIMITS ON EFFECT

Lords amendment: No.3, in page 2, line 40, leave out ("is") and insert ("consists of use").

Mr. Nicholas Winterton: I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Deputy Speaker: With this it will be convenient to take Lords amendments Nos. 4 to 11 and 13.

Mr. Winterton: The House is aware from the comments already made that the Olympics association right is a wide right which confers exclusive rights in relation to the use of the Olympic symbol, motto and protected words, similar to the right of the proprietor of a registered trade mark. The Bill is assiduous in its protection of existing and deserving rights. I have already set out some of those circumstances.
Lords amendments Nos. 3 to 11 and 13 relate to the exceptions to the Olympics association right in clause 4, subsections (1) to (4) that concern the inclusion of control representation in literary, dramatic and musical works, artistic works, sound recording, film broadcasts and cable programmes.
The Olympic games are public events, as my hon. Friend the Minister and others have stated this morning, and it would be quite unfair and totally impractical for the Bill to prevent broadcasters, journalists, photographers, artists and film makers from making reference to the Olympic games without the consent of the proprietor. That would be unacceptable censorship. Clause 4, subsections (1) and (2), as amended in the Lords, provide that the use of a controlled representation in literary works and so on will not infringe the Olympics association right, provided that the work is not used in relation to goods or services and is in accordance with honest commercial practice.
However, the Bill seeks to prevent the exploitation of a permitted artistic work to get around the Olympics association right. It is not intended, for example, that a person could use a television commercial—itself a permitted broadcast—to advertise a product by reference to the Olympic games. It is not intended that a person could use an artistic work as a design for goods such as T-shirts, sports bags and equipment simply to sell that equipment.
Concerns were raised in another place as to whether the restrictions on the use of a work as previously drafted—that is, that an artistic work cannot be used for advertising or promotional activities—covered the full range of practices by which a person who was determined to use a controlled representation might exploit an otherwise bona fide artistic work.
The amendments introduced in another place make it clear that use of a controlled representation in, or comprising, a work will not be permitted if its purpose or use relates to other goods and services—for example, in a television advertisement for sports shoes—or if a perfectly lawful work is subsequently used to advertise other goods and services. Any of the actions illustrated in clause 3(2) as examples of what may be used in the course of trade may also constitute use in relation to goods and services. Thus, if a trader fixes a design to a T-shirt which is exploited commercially, he will be in breach of the Olympics association right.
Amendment No. 11 makes that quite clear. It is the same as the test for determining whether the use of a registered trade mark is an infringement under the Trade Marks Act 1994. There is nothing contentious or novel

about the amendment; it merely clarifies what was intended, and closes loopholes that would be available to an unscrupulous dealer.

Mr. Luff: I am keen for the point raised by the hon. Member for Brent, East (Mr. Livingstone) about use of the slogan in political campaigning to be properly dealt with. On 3 February, my hon. Friend the Minister suggested that that might fall foul of the Bill. Do the amendments deal with the problem?

Mr. Winterton: They do indeed. I shall come to that in a moment.
Of course, a controlled representation should be capable of being used in relation to literary or artistic works that are themselves genuinely about the Olympic games or the Olympic movement, rather than being merely a commercial exploitation. Provision for that is made in clause 4(4), which would allow, for example, trailers for television coverage of the Olympic games or merchandise promoting films about them.
Lords amendments Nos. 3 to 11 and 13 make much clearer what is and is not allowed with regard to use of a controlled representation in a literary or artistic work, but they make the example raised on Second Reading by the hon. Member for Brent, East (Mr. Livingstone)—the use of a satirical cartoon featuring the games in a T-shirt design as a campaign against the games—an infringement. The cartoon itself would not constitute such an infringement, but its use on the T-shirt would.
The Secretary of State, by directions or regulations or in some other manner, would make it clear that the BOA would have no remedy in such circumstances. Lords amendment No. 10, however, puts the matter beyond doubt by providing that use of a controlled representation in a work that is, to an extent, about the Olympic games or the Olympic movement should be allowed when the use of that work is not for the purpose of gain for any person, or loss for another. I hope that that reassures my hon. Friend the Member for Worcester (Mr. Luff).
I am sure that the House will agree that clause 4(1) and (2) make the position relating to films, broadcasting and so forth entirely clear, and that they have closed a loophole that might have been available to unscrupulous dealers.
Until now, the United Kingdom has been glaringly alone among the great sporting powers of the world in not having legislation to protect commercial property rights relating to the Olympic symbol. The House can be content that the Olympics association right will be secure in the able hands of the BOA. I am grateful to the BOA for the help that it has given me with the Bill—and to my hon. Friend the Minister and his Department, and other Departments that have helped me to draft the legislation.
The Bill will assist the BOA's attempts to build on the nation's success in the Olympic games. It will also safeguard the revenue that, in the modern age, is so important to ensuring success. I warmly welcome this morning's press announcement, and what has been said in the House, about the Government's initiative: my hon. Friend the Minister and the Prime Minister have announced the production of a fairly dramatic document about the future of sport, and the need for coaching and training so that the country can go from strength to strength.
As I have said, revenue is important to the ensuring of success—success not only for such people as Linford Christie, Colin Jackson, Sally Gunnell and Jonathan Edwards, but for the hundreds, perhaps thousands, of other competitors who sacrifice their normal life and, perhaps, their careers for the pride of competing in international sport on behalf of our nation. It is to them that we owe the dignity of statutory protection that my Bill affords to the Olympic symbols.
I am pleased to be able to say that sponsorship raised with the benefit of the Bill will be available for British athletes to compete in the Atlanta Olympic games in 1996, at which I am sure that British sport will take its customary place at the high table of sporting achievement.
I commend the amendments and the Bill to the House.

Mr. Fabricant: I seek clarification on two matters. First, however, let me express the hope that Mr. Spencer Duval will be taking part in the Atlanta games in 1996. He is a constituent of mine, living in Lichfield; he is also the son of Mr. Derrick Duval, the immediate past chairman of my Conservative association.
I am concerned about two aspects of the visual representation of the Olympic games. My hon. Friend the Member for Macclesfield (Mr. Winterton) will know that the Select Committee on National Heritage recently examined the film industry. I, certainly, was delighted with the response of the Department of National Heritage, which is to take innovative action in regard to the film industry. I hope that my right hon. and learned Friend the Chancellor of the Exchequer will do the same in his Budget.
One of our best film producers is David Puttnam, who, as hon. Members will know, produced "Chariots of Fire", a very successful film. Would the production of a film of that kind, depicting the Olympic games in the past, present or future—fictional or historical—be inhibited by any of the proposals of my hon. Friend the Member for Macclesfield?
My visit to Barcelona made me very aware that television rights are tremendously important to the funding of the Olympic games. Their sale is the largest single source of income for the provision of the games in a city. Will my hon. Friend assure me that other broadcasters would be prevented from breaking those rights, thus reducing the amount of income available to a city promoting or holding the games?

Mr. Winterton: My hon. Friend the Member for Mid-Staffordshire (Mr. Fabricant) has posed some sensitive and difficult questions. I hope that what I have already said makes it clear that we considered them when drafting the details of the Bill. I understand that the legislation covers both his points. I do not believe that there would be any impediment to the production of the kind of film with which David Puttnam—a very distinguished producer—was involved; however, safeguards are built into the legislation.
I believe that the Bill takes care of my hon. Friend's second point as well—but my hon. Friend the Minister may well wish to say a final word.

Mr. Sproat: I rise, somewhat unexpectedly, to respond to the two interesting questions posed by my hon. Friend the Member for Mid-Staffordshire (Mr. Fabricant). The answers are simple. "Chariots of Fire" could certainly have been made under the provisions of the Bill; as for television rights, they would not be a matter for the BOA, but would be negotiated by the central Olympic body.

Lords amendment agreed to.

Lords amendments Nos. 3 to 15 agreed to.

Insurance Companies (Reserves) Bill

Lords amendments considered.

After Clause 2

CONSEQUENTIAL AMENDMENTS

Lords amendment: No. 1, insert the following new clause—

CONSEQUENTIAL AMENDMENTS

(".—(1) Schedule 9A to the Companies Act 1985 and Schedule 9A to the Companies (Northern Ireland) Order 1986 (form and content of accounts of insurance companies and groups) shall be amended as follows.

(2) In Note (24) on the balance sheet format set out in Section B—
(a) after "(Liabilities item C.5)" there shall be inserted—
This item shall comprise the amount of any reserve maintained by the company under section 34A of the Insurance Companies Act 1982."; and
after "This item shall" there shall be inserted "also".

(3) For paragraph 50 there shall be substituted—
Equalisation reserves

50. The amount of any reserve maintained—
(a) under section 34A of the Insurance Companies Act 1982 ("the 1982 Act"), or
(b) under regulation 76 of, and Schedule 14 to, the Insurance Companies Regulations 1994 ("the 1994 Regulations"),
shall be determined in accordance with regulations under section 34A of the 1982 Act or, as the case may be, in accordance with regulation 76 of, and Schedule 14 to, the 1994 Regulations.".")

Mr. Nick Hawkins: I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Deputy Speaker (Dame Janet Fookes): With this, it will be convenient to discuss also Lords amendment No. 2.

Mr. Hawkins: The amendment is necessary to ensure that the Companies Act 1985 and the Companies (Northern Ireland) Order 1986 comply with our obligations under European law. The amendment also ensures that those preparing insurance companies' accounts will know exactly how to report equalisation reserves that have been set up as a result of regulations made under the Bill, and also ensures that users of the accounts will have clear guidance on what to expect.
I should like to take the opportunity to thank the Earl of Northesk, who tabled the amendments in another place, for his prescience and his skilful handling of the Bill during its passage through another place. I also pay tribute to my hon. Friend the Member for Hertfordshire, North (Mr. Heald), the promoter of the Bill. I am delighted to see my hon. Friend in his place in the Chamber, as it gives me an opportunity to congratulate him on his extremely well deserved promotion to the Government. My hon. Friend has worked extremely hard on the Bill, and it is a privilege for me—as vice-chairman of the all-party insurance and financial services group and somebody who worked for many years as a corporate lawyer in the

insurance and financial services industry before coming to the House—to come in very much at the end of the Bill's passage.
I would also like to pay tribute to the work done on the Bill by my hon. Friend the Member for Ryedale (Mr. Greenway), the chairman of the all-party group on insurance and financial services. Sadly, my hon. Friend cannot be with us today, but he spoke in earlier debates on the Bill and his work as chairman of that group is recognised on both sides of the House. I would also like to thank the hon. Member for Edinburgh, Central (Mr. Darling), who speaks on these matters for the Opposition, for his assistance in the earlier stages of the Bill.
The Bill deals with a matter with which I was concerned for many years before coming to the House. It may be of interest to say that the amendments are welcomed both by the Association of British Insurers and by the London Insurance and Reinsurance Market Association. The chief executive of the latter is Miss Marie-Louise Rossi, the daughter of the former and distinguished Member for Hornsey and Wood Green. Marie-Louise Rossi and I collaborated with others some years ago on a paper that called for precisely the kind of measures dealt with by the amendments.
Before I go on to explain the details of the two amendments, I should like to give the House the benefit of setting the matter in a slightly fuller context by way of an explanation of some of the developments in company law that led to the insurance accounts directive and the Companies Act (Insurance Companies Accounts) Regulations 1993.
Over the years, there have been a number of European directives to harmonise the accounts of companies. The first was the fourth company law directive 1978, implemented here by the Companies Act 1981, which harmonised the form and content of the individual accounts of companies. The seventh directive of 1983 harmonised the form and content of the consolidated accounts of groups and companies, and was implemented in this country by the Companies Act 1989. The fourth directive permitted member states to derogate from its provisions in the case of banks and insurance companies, pending the adoption of further directives.
The United Kingdom, like other member states, took advantage of the derogation and did not apply the provisions of the fourth directive to banks or to insurance companies. The existing legislation was largely left in place, leaving insurance companies with certain disclosure exemptions—for example, those enabling them to maintain hidden reserves. The bank accounts directive, which introduced a special accounting regime for banks, was passed in 1986, and implemented in regulations in 1991. The regulations introduced a new schedule 9 into the Companies Act, setting out requirements for the form and content of the accounts of banks and banking groups.
The European Community's insurance accounts directive follows the partner bank accounts directive in applying a number of provisions in the fourth and seventh directives to the accounts of insurance undertakings, while containing a number of provisions specific to insurance companies. The Companies Act (Insurance Companies Accounts) Regulations 1993, in implementing the insurance accounts directive into the United Kingdom, will bring the level of disclosure of insurance companies accounts into line with others in Europe, and with those of ordinary companies.
It is important to recognise that there are considerable differences in detail which arise because of the particular nature insurance business. The Companies Act (Insurance Companies Accounts) Regulations 1993 amended the Companies Act 1985 by inserting a new schedule 9(a) to implement the EC directive on the accounts of insurance undertakings which was adopted in December 1991. The equivalent schedule for Northern Ireland was inserted by the Companies (1986 Order) (Insurance Companies Accounts) Regulations (Northern Ireland) 1994.
The regulations are primarily concerned with the presentation and content of the annual reports and accounts of insurance companies to their shareholders or members. They also deal with the consolidation of the accounts of insurance groups and the distinct regulatory returns which such a company makes to the Department of Trade and Industry in compliance with its obligations under the Insurance Companies Act 1982. The 1993 regulations require considerable disclosure of information, and the standard formats for the balance sheet and profit and loss account are prescribed.
Detailed rules concerning accounting treatments, the valuation of certain types of asset and liability and the specification of the matters are to be disclosed in the notes to the accounts. The provisions of the 1993 regulations are mandatory for the accounts of insurance companies and groups for the financial years commencing on or after 23 December 1994. Insurance companies, in their accounts for this year until 31 December 1995, will thus be required to follow the regulations and to restate their 1994 results as comparatives.
The insurance accounts directive contains a number of member state options. In drafting the 1993 regulations, the Government's approach was to seek to permit as much reasonable flexibility as possible within a general framework provided by the directive. That was very much welcomed by the insurance industry, as, in trying to anticipate the future, the 1993 regulations might not give the required guidance in respect of all types of equalisation reserve.
During consideration of the Insurance Companies (Reserves) Bill, it became apparent that the regulations would have to be amended to accommodate reserves that might be created under the new section 34(a) of the Insurance Companies Act 1982, as the 1993 regulations only covered the treatment of the reporting of credit equalisation reserves. Since that was the only form of statutory equalisation reserve contemplated at that time, it was thought to be sufficient. However, the consequential amendments to be made by the Lords amendments needed to ensure that schedule 9(a) continues to implement the directive's requirement concerning the treatment of equalisation reserves in the accounts.
Under article 31 of the directive, an equalisation reserve, which a company is required to maintain whether by law or by administrative requirement, must be shown in the balance sheet as a technical provision under the liabilities of item C.S. At present, there is only one type of equalisation reserve which UK insurance companies are required to maintain—the credit insurance equalisation reserve—and the provisions governing this reserve are now contained in regulations 76 to 78 of and schedule 14 to the Insurance Companies Regulations

1994, which is SI 1516. Consequently, only such reserves are required to be shown under the liabilities in item C.5 in schedule 9(a) of a balance sheet.
Subsection (2) of Lords amendment No. 1 amends the notes to the balance sheet format to require that reserves required to be maintained by a company under section 34(a) of the Insurance Companies Act 1982 also need to be shown under this balance sheet caption. Although it is a technical matter, it is important.

Mr. Peter Ainsworth: I am grateful to my hon. Friend for interrupting his technical analysis of the legislation. Am I right in thinking that some, perhaps in the accountancy profession, have argued that as what is involved here is a reserve and not a liability, item C.5 might not be the appropriate place for equalisation reserves to be disclosed in the balance sheet?

11 am

Mr. Hawkins: My hon. Friend raises an important concern. I propose to deal with some of the concerns that the accountancy profession has expressed a little later in my remarks. I am sure that my hon. Friend will be pleased to know that it is now understood that the Accounting Standards Board, following discussions with the Department of Trade and Industry, has agreed a position. Perhaps we shall hear a little more about that from my hon. Friend the Minister. I shall deal with the matter later if my hon. Friend will allow me.
Subsection (3) of the new clause which amendment 1 seeks to insert amends paragraph 50 of schedule 9A in accordance with the requirements of article 62 of the directive to provide that the amount of equalisation reserves maintained under section 34A of the 1982 Act be determined in accordance with regulations made under that section. The word "determined" has been substituted for the word "value" on the basis that it more accurately reflects the requirement to maintain reserves. That is believed to be equally consistent with the terms of article 62 of the insurance accounts directive, which provides that member states which require equalisation reserves shall prescribe the valuation rules to be applied to those reserves.
No amendment is required in respect of the profit and loss account format, because the existing wording refers to
change in the equalisation provision",
which will cover all such provisions that are required to be maintained.
On the matter of matching the returns to the Department of Trade and Industry and shareholder accounts, the amendments will also have the benefit of keeping treatment of equalisation reserves in the returns to the regulator, the DTI and the accounts to shareholders on a similar basis. Although the two reports are prepared on a different basis in some respects, it is helpful to keep the formats broadly similar. The amendment achieves that.
Companies will in future in periods covered by the insurance accounts directive, namely, financial years commencing on or after 23 December 1994, in their annual returns to the DTI be expected to differentiate between statutory and non-statutory equalisation reserves in line with the provisions of article 30 of the insurance accounts directive.
The issue of whether accounts show a true and fair picture is extremely important to the accountancy profession. I am very much aware that a view has been expressed in the profession that this accounting treatment of equalisation reserves might not be desirable because it shows an item which, in the view of some members of the accountancy profession, is a reserve, as a liability since it relates to future claims. I respond to that in two ways. This point perhaps deals with the important point made by my hon. Friend the Member for Surrey, East (Mr. Ainsworth).
First, as I have explained, this treatment is embodied in European law. It is the way in which many European states have accounted for equalisation reserves. There was a clear majority for including that treatment in the insurance accounts directive. Therefore, the UK has no option but to follow that treatment. It accepted the principle when it adopted the treatment for credit equalisation reserves.
Secondly, however, I see a distinction between equalisation reserves and other reserves. Their levels are set such that, having regard to previous volatility in the areas of business covered, it is foreseeable that those continuing in these lines are encounter liabilities in the form of exceptional levels of claims for which they will need their equalisation reserves.
The House will recall from the very able presentation at an earlier stage in the Bill's proceedings by my hon. Friend the Member for Hertfordshire, North that the whole purpose of equalisation reserves is to deal with the particular extraordinary liabilities of massive environmental and other disasters. That is the crucial matter not only in the Bill but in the amendments.
I know that discussions are continuing within the insurance industry and the accounting profession. I am confident that there will be final agreement on the way in which equalisation reserves should be disclosed in the accounts of UK insurance companies, to comply with the law and with the accountancy profession's desire that what is disclosed is, as far as possible, in accordance with the generally accepted accounting practice of the UK accounting profession as regards a true and fair view. That is clearly extremely important.
As for the single market, as my hon. Friend the Member for Hertfordshire, North explained most ably on Second Reading, the industry is convinced that equalisation reserves have an important, indeed crucial, part to play in ensuring the success of insurance companies in competing with others based in a single insurance market within Europe and in the world markets, where UK companies compete head on with their European rivals. If one examines the amount of premium income from some of the European companies such as Allianz in Germany and UAP in France, one sees that it is crucial that UK insurance companies, which have a massive opportunity in the world insurance market, should be able to compete in an even way with their European rivals.
The insurance accounts directive is a key part of the EC single market programme which the Government have so strongly and rightly supported. It plays an important role in opening up the EC insurance market by improving the comparability and transparency of insurance companies' accounts throughout the EU. It is complementary to the third life and non-life insurance directives, which provide the legislative framework for the single market in insurance products. A significant part

of the directive's purpose is to improve the comparability of the accounts of insurance companies and groups throughout the EU by providing a measure of harmonisation of their form and content. That is an important part of the development of—to use the notorious but important phrase—a level playing field in insurance.
The amendment plays a key part in the Bill's objective of assisting the competitiveness of the UK insurance industry with its European counterparts in both the European and world markets. Many policy holders and their advisers choose an insurance company at least in part on the strength of its position as shown in its accounts. The amendment ensures that those preparing and using insurance company accounts will know clearly how equalisation reserves set up as a result of regulations made under the Bill are reported.

Mr. Peter Ainsworth: I am grateful for the opportunity to say a few words on this excellent Bill. I should like to preface my remarks by complimenting my hon. Friend the Member for Hertfordshire, North (Mr. Heald), now Under-Secretary of State for Social Security, on having.the inspiration to introduce the Bill and on taking it so ably through the House as far as he was competent to do so. I also congratulate him on his elevation to ministerial rank. The House will appreciate the work that my hon. Friend the Member for Blackpool, South (Mr. Hawkins) has undertaken since taking up this worthwhile cause.
We were talking earlier about the Olympics and the world of sport. The world of insurance seems a far cry from the glamorous world of the Olympics. I mean no disrespect to my hon. Friend the Member for Blackpool, South when I say that, but these are technical matters which are likely to remain opaque to most members of the public. They are none the less important matters. Many of us have our ups and downs with the insurance industry. I certainly have. It is not one of my favourite things to have to deal with. One puts in a great deal of money and gets it back only when something unpleasant happens. The industry has a difficult public relations exercise to conduct.
None the less, insurance is one of our most important industries. In London alone, it employs about 60,000, people and the non-life side of the business, which is the side that is likely to benefit from this legislation, involves premium income of about £12 billion a year. It is a major and successful part of British industry, one of the keys to the success of the City of London, which is so important to the economy of the nation as a whole, and a substantial employer.
The industry has come under a lot of pressure, however, in recent years. Obviously that was partly due to recessionary factors, increased competition and the string of almost unprecedented natural disasters—earthquakes, storms, hurricanes, typhoons, the Piper Alpha disaster and so forth. It is in establishing a better way to provide for that sort of eventuality that the claims equalisation reserves will be so helpful.
United Kingdom insurance companies have been subject to a competitive disadvantage because they have not had tax relief on setting up equalisation reserves to smooth the peaks and the troughs of the insurance business when such disasters strike. On Second Reading, it was clearly established that, while there is no call on the Exchequer in establishing the reliefs envisaged in the


Bill, there will be a significant economic and commercial benefit to the insurance world, and I sincerely hope also to the customer. Every year, the premiums that we are asked to pay seem to rise inexorably. The establishment of equalisation reserves could smooth things out and reduce the need for these apparently inevitable hikes in the premiums, which will be a very good thing.
The Bill is simply an enabling measure. My hon. Friend the Member for Hertfordshire, North published a consultation document, which I hope will receive wide attention. I also hope that, following today's debate, he will be able to move swiftly forward with detailed regulations to implement what is envisaged in the Bill.
The amendments that the other place has wisely put before this House are very welcome, as my hon. Friend the Member for Blackpool, South said. The enormous technicality of whether liabilities item C.5 is the appropriate place for the reserves to be, I leave to accountancy professionals, to whom these things mean something. I am told, however, that the amendments will require companies to show all the equalisation reserves that they are required to maintain under the item, which will create the clarity and consistency that are so important to those who use the accounts of insurance companies and study such matters.
There is also the European dimension. There is not much point in setting out procedures to establish a more level playing field with our European competitors, if the accountancy treatment of the claims equalisation reserves is not consistent. As my hon. Friend the Member for Blackpool, South said, the amendments help to place our insurance industry on a more equal footing with its European competitors, which have successfully increased their market share in London in recent years.
Although the Bill may appear dry, academic and technical, it has a great deal to do with promoting and securing the success of one of our most important industries and is, therefore, welcome, as are the amendments. I sincerely hope that the Bill will be successful and that my hon. Friend the Minister will be swift in implementing legislation to bring this important competitive advantage to one of our most distinguished and successful industries.

Mr. Alistair Darling: We support the Bill and the amendments and I am grateful to the hon. Member for Blackpool, South (Mr. Hawkins) for having set out the background and drawn our attention to many interesting points to which the Minister will no doubt reply and on which I see no need to comment.
It would also be right to draw the attention of the House to the efforts of the hon. Member for Hertfordshire, North (Mr. Heald). As those of us who have engaged in the lottery of the private Member's Bill procedure to introduce legislation that has all-party support know, it takes a lot of time. It is remarkable how Bills that have all-party support tend to be held up much more than those that are contentious. The hon. Gentleman deserves credit and his efforts have clearly been noted by the Whips and his leader as he has been promoted to greater things.
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We should also be grateful to the other place, which, as we have come to expect, has amended and improved

the Bill. It is worth reflecting on the fact that many private Member's Bills are substantially improved and tightened up in the other place, which deserves credit for that.
I raised the need for such a provision during the passage of the 1993 Finance Bill. Although I am sorry that the Government were not able to find Government time for the legislation, we now have a measure which will hopefully receive Royal Assent shortly and which, as the hon. Member for Surrey, East (Mr. Ainsworth) said, will greatly benefit the insurance industry, particularly as it finds itself in increasing competition with insurance companies based in other parts of the European Union. Most other member states have such provisions, which gives them a competitive advantage.
There is no doubt, either in the industry or in the House, that this measure is a great advantage to the industry. All of us want the United Kingdom insurance industry to compete well within the EU and other parts of the world, which it is doing. Other measures will, of course, be necessary to help, but the Bill is very welcome.
I have two questions of which I gave the Minister some prior notice at least an hour or so ago and I will put them on record so that I can get a Government response. I appreciate that the Minister represents the Department of Trade and Industry rather than the Treasury, but I think that I may properly ask him when the Government will say whether tax relief is to be given or what measure of it is to be given to the reserve funds. One of his colleagues in the other place said that the Government would at some stage indicate its tax policy and reference was made to a statement by the former Financial Secretary to the Treasury, who said that the Government were considering tax relief for an acceptable scheme. It might be helpful if the Minister told us what stage those considerations have reached. I appreciate the fact that that may properly be a matter for the Chancellor's budget statement, but it would help the industry and the House if the Minister said how far the Inland Revenue has got.
To some extent, the question of tax relief begs the question as to what the regulations will be. Without that detail it is difficult to see on what basis there would be tax relief. One point that is worth drawing out is that, when the matter was first raised and a former Financial Secretary to the Treasury—now Secretary of State for Health—made a statement of the Government's intent, it was said that the matter was to be tax-neutral. Perhaps the Minister can confirm that that is the case, if he is in a position to do so.
Another obvious question is, where have we got with the regulations to be made under the Bill? The DTI has produced a consultation paper, to which the industry and others have no doubt been responding.
For the Bill to work there must be regulations and it is in the interests of all concerned that those regulations are brought before the House at the earliest opportunity. I saw in the DTI consultation paper that it was thought that those regulations would come into effect in December 1995. Given that the House is about to rise for the long summer recess and will not return until the middle of October, time is getting tight. So I assume that the regulations are at an advanced stage or that those in the DTI and possibly the Treasury will work throughout the summer to lay the regulations before the House when we return. Although that is conceivable, will the Minister let us know the position?
It would be helpful if the Minister gave a specific response on those two matters. He may also wish to respond to the other matters that have been raised but I do not intend to refer to them because that would be unnecessarily repetitive, among other things. I conclude by reaffirming our support for this measure. I hope that it will receive Royal Assent at the earliest opportunity, which will be of great benefit not just to the insurance industry and all those who work in it but to the country as a whole.

The Parliamentary Under-Secretary of State for Corporate and Consumer Affairs (Mr. Jonathan Evans): First, I thank the hon. Member for Edinburgh, Central (Mr. Darling) for his remarks. He is absolutely right to say that in 1993 he first identified the demand on the part of the British insurance industry for equalisation reserves to be granted tax relief, not least to help our insurance companies in the non-life sector to compete with companies on the continent, which are currently given tax relief.
I was grateful for the remarks made by the hon. Member for Middlesbrough (Mr. Bell), who led for the Opposition when the Bill was considered on Second Reading. I should also express a measure of sympathy with the hon. Members for Edinburgh, Central and for Middlesbrough, in that, although they both understood the Bill's importance for the British insurance industry and the fact that it had wide all-party support in the House, they and my hon. Friend the Member for Hertfordshire, North (Mr. Heald), now Under-Secretary of State for Social Security, went through the difficulty of trying to persuade some hon. Members in the new Labour party of the importance of this measure.

Mr. Peter Ainsworth: I was present during the Second Reading debate armed with what I regarded as a finely honed speech, which was never delivered because sadly some Opposition Members were determined to be so voluble as to impede the Bill's progress. I remind my hon. Friend that the hon. Member for Bolsover (Mr. Skinner) said that the Bill
is all about arranging things in favour of the bosses of the insurance companies so that they can get increased directors' pay and all the rest of it."—[Official Report, 27 January 1995; Vol. 253, c. 651.]
My hon. Friend might like to comment on that assertion.

Mr. Evans: I do not intend to detain the House with too much comment in that direction because in a way it would be unfair to the hon. Member for Edinburgh, Central, who has always supported this measure. Although the Bill has had widespread all-party support, I recognise that there have been difficulties and I am grateful to the hon. Gentleman for the efforts that he, at least, has made to persuade those in his party of the merits of the argument. He knew that the Bill was of great importance to the insurance industry.

Mr. Darling: I am grateful to the Minister for his kind comments and for letting me intervene. As people outside the House follow our proceedings, I should draw attention to the fact that part of the difficulty in relation to this Bill and others was that it was caught up in the controversy about the Civil Rights (Disabled Persons) Bill, which I note has been set down for today's business. That fact, and everything that the public and the House know about how the Government dealt with that Bill, led to unfortunate delays on this measure and others. With due

respect to the Minister, it might be an idea to get on with discussing this Bill rather than engaging in a political dogfight, which I am happy to have but which would not be particularly productive on a day such as this.

Mr. Evans: I had intended to move on with the Bill in hand. The only thing that prevented me from doing so was my generosity in giving way to the hon. Gentleman.
I am grateful to those hon. Members who expressed their thanks to my hon. Friend the Member for Hertfordshire, North for introducing this measure in the first place. At this stage, he cannot take the proceedings further because of his well deserved appointment to ministerial office, but we all recognise the efforts that he made in carrying the measure through. I thank my hon. Friend the Member for Blackpool, South (Mr. Hawkins) for taking on the Bill at this relatively late stage in the proceedings. I also thank the noble Earl Northesk, who demonstrated great competence and clarity when he presented the Bill in another place.
My hon. Friend the Member for Blackpool, South has mastered the details of the Bill quickly and presented the Lords amendments before the House skilfully and persuasively. They are technical matters but they are also very important. This debate has been valuable and thoughtful. I join those hon. Members who have welcomed my hon. Friend's efforts and endeavours for the manner in which they spoke to the amendments today and the efficient organisation that has enabled the Bill to reach its final stages in the House.
May I express my delight that other hon. Members have referred to the role played by my hon. Friend the Member for Ryedale (Mr. Greenway) in his position as chairman of the all-party group on insurance, who has promoted this idea with vigour equal to that of the hon. Member for Edinburgh, Central. Finally, I thank my hon. Friend the Member for Surrey, East (Mr. Ainsworth) who was present throughout Second Reading and is a sponsor of the Bill.
In dealing briefly with the Lords amendments, I take the opportunity to clarify the Government's position on the points that have been raised by the Accounting Standards Board. My hon. Friend the Member for Surrey, East referred specifically to the concerns outlined by the board and others on the accounting treatment of equalisation reserves. This matter has been discussed with the Accounting Standards Board and the Association of British Insurers. Under the insurance accounts directive, equalisation reserves are required to be shown as liabilities in published accounts. The amendments introduced by the noble Earl Northesk in another place give effect to that part of the directive for any equalisation reserves that might be created using new section 34A of the Insurance Companies Act 1982, which is inserted by the Bill.
The Government recognise that that treatment would not normally apply under generally accepted accounting principles in the United Kingdom. Equalisation reserves represent amounts set aside to meet potential future obligations. Such amounts would normally be treated as reserves rather than liabilities in a company's accounts. We have received representations from the Accounting Standards Board and others that there should be adequate disclosure in the accounts to enable someone reading the accounts to understand the nature of the equalisation reserve, and that the treatment of equalisation reserves required by the insurance accounts directive should not be permitted to weaken the "true and fair" concept that applies to company accounts generally.
On the first point, I understand that the Accounting Standards Board and the Association of British Insurers are discussing how adequate disclosure can be achieved, and that there are good prospects for agreeing guidance to companies on that issue. We fully support that. On the second point, the Government have strongly supported the extension of "true and fair" reporting to the insurance sector via the insurance accounts directive.
Save in exceptional circumstances, such as those that apply to equalisation reserves, insurance companies are legally obliged to follow the true and fair requirement as it applies generally. Like other companies, they are expected to comply with applicable accounting standards. We do not believe that the treatment of equalisation reserves has any wider implications for the interpretation or meaning of the "true and fair" view which all company accounts are required to give, either in relation to other aspects of the insurance business or for companies more generally.
Having dealt with those matters which are directly related to the amendments before the House, I will now respond briefly to the points raised by the hon. Member for Edinburgh, Central. He will be aware that this measure is necessary because it is a preliminary step that must be in place to ensure that tax relief can subsequently be made available for equalisation reserves.
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That is a twofold process. The first part of the process is for us to have legislation in place. The second part much involves Treasury Ministers. It is for my right hon. and learned Friend the Chancellor of the Exchequer, when he comes to make his Budget statement, to make any statement that may be necessary about the tax treatment of the reserves that we are discussing. The Government have made it clear throughout the passage of the Bill that they are not in a position at this stage to give any commitment on what the position may be at the time of the Budget statement. The Bill is important because it is vital to ensure that a statutory vehicle is available as and when tax relief may be agreed by my right hon. and learned Friend the Chancellor.
The hon. Member for Edinburgh, Central talked about the period of consultation on draft regulations. The hon. Gentleman will know—he has seen the consultation paper—that there has been widespread consultation. I understand that over the past few days the Department has received responses from the London Insurance and Reinsurance Market Association and the Association of British Insurers. We would hope to be in a position to publish draft regulations by about mid-September. Thereafter the regulations will be laid as and when any concession may be made on the tax treatment of the reserves. It would be inappropriate to lay any such regulations unless subsequently there is a statement by my right hon. and learned Friend the Chancellor to the effect that such tax treatment will be made available.
Once again, I thank my hon. Friend the Member for Blackpool, South for all his work on the Bill and congratulate him on his skill in explaining the amendments. I also offer my thanks to my hon. Friend the Member for Hertfordshire, North for his efforts in introducing the Bill when he was on the Back Benches. I am well aware that in the non-life sector the Bill is warmly welcomed by the insurance industry. The Government welcome it as well.

Mr. Hawkins: I shall respond briefly to one or two of the points made in this short but important debate. I thank my hon. Friend the Minister for what he has said about the agreement between the Accounting Standards Board and the Association of British Insurers. I thank also my hon. Friend's officials, who have clearly been working extremely hard to ensure that the agreement between the board and the ABI can be referred to this morning.
I pay tribute to my hon. Friend the Member for Surrey, East (Mr. Ainsworth) both for his perceptive interventions and remarks this morning and for being present throughout the earlier stages of the Bill's consideration. He was a sponsor of this important measure. It is a great shame that he did not have the opportunity to give the House the benefit of his fuller remarks on Second Reading. We have had an indication this morning of the interest that he takes in these matters. Perhaps there will be other occasions when insurance matters come before the House, when we will be able to hear my hon. Friend at greater length.
I look forward to the future discussions between the Accounting Standards Board and the ABI. I am as confident as my hon. Friend the Minister that an agreed view will be reached. I look forward also to seeing the results of the consultation process. Important issues are dealt with in an extremely detailed consultation paper that has been produced by the Department. I do not intend to detain the House by referring to those issues. I welcome the fact that some of the most important bodies such as the London Insurance and Reinsurance Market Association and the ABI have already made submissions in response to the consultation paper. I hope that many other bodies and companies will do so. It is crucial that United Kingdom insurance companies should benefit from this legislation to enable them to compete adequately in the rest of the world with European insurance companies.
I welcome the contributions that have been made in this short debate.

Lords amendment agreed to.

Madam Deputy Speaker: We now come to Lords amendment No. 2, which will be moved formally.

Mr. Hawkins: Rather than moving it formally, Madam Deputy Speaker, I should like to say a few words.

Madam Deputy Speaker: That is not possible. As Lords amendments Nos. 1 and 2 were grouped together, any remarks about amendment No. 2 should have been made when amendment No. 1 was being discussed. It is now too late.

Lords amendment No. 2 agreed to.

National Health Service (Amendment) Bill

Lords amendment considered.

Clause 14

SHORT TITLE, ETC.

Lords amendment: No. 1, in page 11, line 12, after ("2") insert (",3").

Mr. John Austin-Walker: rose—

Mr. Michael Fabricant (Mid-Staffordshire): On a point of order, Madam Deputy Speaker. I raise this matter while my hon. Friend the Under-Secretary of State for Corporate Affairs is still in the Chamber. Is he to make a statement about the marvellous news in the west midlands—I have the privilege to be a west midlands Member—that £80 million of intervention funding is to be made available by the Department of Trade and Industry? We are seeing a £400 million investment of private money from the Jaguar motor company, some—

Madam Deputy Speaker: Order. I cannot allow the hon. Member to raise a point of order simply to make observations. The matter is concluded.

Mr. Austin-Walker: I beg to move, That this House doth agree with the Lords in the said amendment.
Hon. Members will remember that the Bill received all-party support during each stage of its passage through the House, for very good reasons. It was understood that the Bill was concerned with the protection of national health service patients. The same was true in the other place. There has been all-party agreement on the Bill's principles and scope. I wish to reassure hon. Members immediately that the amendment does not alter those principles or scope.
The amendment was introduced in the other place by the Government. It received cross-party support. It deals with a technicality. It clears up a difficulty in the drafting of the Bill, and relates to the timing of the commencement of the Bill, when enacted, in relation to the coming into force of the Health Authorities Act 1995.
The Bill rightly refers to "health authorities". It refers to the new authorities that will come into existence on 1 April 1996 when the Health Authorities Act comes into force. Family health services authorities are not health authorities within the meaning of the National Health Service Act 1977. To allow the provisions of the Bill to apply to family health services authorities before April 1996, provision had to be made for reference to health authorities to be read as references to family health services authorities. Clause 14(5) provides that where clauses 2 and 6, which set out the arrangements for the suspension of practitioners and for the constitution of the tribunal, refer to a health authority, that means a family health services authority until 1 April 1996.
Regrettably, clause 14 omitted an additional reference to a health authority. The additional reference is contained in clause 3. One of the effects of clause 3 is to bring tribunals into line by removing practitioners' right of appeal to the Secretary of State against directions of the NHS tribunal. Such appeals will be made to the High Court on a point of law. Perhaps most importantly, the

clause provides health authorities with the power to implement tribunal directions that practitioners should be disqualified. That is the central point of the Bill.
If clause 3 had remained unamended, tribunal directions to disqualify practitioners between the date of commencement of this measure and 1 April 1996 would be meaningless. They could not be put into effect by family health services authorities. By bringing clause 3 into the ambit of clause 14(5), the problem will be overcome.
I believe that it would have been possible technically to delay the implementation of clause 3 until after the Health Authorities Act came into force. I discussed that possibility with the Department and with officials of the NHS executive. However, the Government concluded that it was preferable to table the amendment to preserve the Bill's intentions. I agree with that view and I am happy to accept the amendment.
As I said on Second Reading, I presented the Bill in the light of the experience of some of my constituents because I believed that their safety was placed at risk by the existing arrangements. I raised those matters with the Minister of State. He and I normally exchange angry views across the Chamber but I hope that the Under-Secretary of State for Health, the hon. Member for Battersea (Mr. Bowis), will convey my thanks to the Minister of State for his positive response to me. I also thank Baroness Gardner of Parkes for taking the Bill through the Lords, the officials in the Department of Health and especially those in the national health service executive for their assistance. The amendment is small but important. I commend it to the House and hope that hon. Members will give the Bill final approval.

Mr. Paul Boateng: On behalf of my hon. Friend the Member for Dulwich (Ms Jowell), who speaks for the Opposition on these matters and is unavoidably detained by a long-standing constituency commitment, I welcome the amendment, whose intentions have been explained by my hon. Friend the Member for Woolwich (Mr. Austin-Walker). The House and the millions of national health service patients who will benefit from the Bill owe him a debt of gratitude. He has done the House, his constituents and the nation a great service by introducing this much needed and extremely helpful measure. We are happy to do all that we can to speed it on its way.

The Parliamentary Under-Secretary of State for Health (Mr. John Bowis): I am grateful to the hon. Member for Brent, South (Mr. Boateng), who is standing in for his hon. Friend the Member for Dulwich (Ms Jowell), for his endorsement of the Bill and the amendment. I am sure that he will forgive me if I express even more gratitude to the hon. Member for Woolwich (Mr. Austin-Walker) who has steered the Bill through the House and spoken to the amendment. I am grateful to him for the gracious way in which he spoke about my hon. Friend the Minister of State. I shall certainly pass on his message of a ceasefire, or perhaps a temporary ceasefire. That will be treasured by my hon. Friend who, I am sure, will read Hansard in bed tonight with a little glow of pleasure.

Mr. Boateng: If that is all he gets pleasure from I feel sorry for him.

Mr. Bowis: I do not think we should follow the hon. Member for Brent, South down his pleasure routes.
I am also happy to accept thanks to Baroness Gardner of Parkes and to the officials in my Department and in the NHS executive. I am sure that they will be appreciated.
As the hon. Member for Woolwich said, the amendment seeks to correct an anomaly that would arise if clause 3 were not brought under the scope of clause 14(5). The Bill has the Government's full support and I am pleased, or fairly pleased, to be here to take it through what I hope will be its final stage before Royal Assent. I had the pleasure of dealing with the Bill in its earlier stages and it went to the other place with the Government's blessing.
At first sight the Bill's subject matter seems somewhat arcane. The National Health Service Tribunal is perhaps not much in the public eye. The hon. Member for Woolwich spoke about his personal experiences and about the tribunal's important function. It is a quasi-judicial body which considers representations from family health service authorities that individual practitioners should be removed from authorities' medical, dental, pharmaceutical and optology lists. Doctors, dentists, pharmacists and ophthalmists may provide family health services as unrestricted principal practitioners only if they are included in such a list. The NHS tribunal is the only body with the power to remove them from a list and thus from general practice.
As the House would expect, the tribunal's powers are rarely invoked and only in extremely serious cases where a practitioner's conduct or practice is such that the family health services authority feels that the provision of services is in jeopardy. The tribunal is asked to consider only about five or six cases a year, but they involve circumstances, about which the hon. Member for Woolwich spoke at an earlier stage in the Bill's progress, where patient care may have been compromised either directly, because the practitioner poses a physical threat to his patient, or indirectly, because the standard of care that he provides falls far short of that which the NHS, patients and the House have a right to expect.
11.45 am
In cases where the tribunal considers an authority's concerns to be justified, it may order the removal of a practitioner's name from the appropriate list and may even prevent its inclusion in similar lists that are held by other authorities. I pay tribute, as I am sure does the hon. Member for Woolwich, to the tribunal's chairman, Adrian Whitfield QC, for the assiduous way in which he and his colleagues perform their functions.
The tribunal has far-reaching powers but the Bill is valuable because the workings of the tribunal could be streamlined in several ways. It is valuable most of all because there is a serious gap in the tribunal's available powers. The Bill allows for the appointment of a permanent deputy chairman, lay members and a wide pool of professional members. That would better equip the tribunal to carry out its functions with the required speed.
The Bill will enable the NHS tribunal to declare that disqualified practitioners should not be allowed to work in the family health service as locums, assistants or deputies to principal practitioners. At present no such restrictions are available to the tribunal, even when it feels

that it would be wholly inappropriate for a disqualified practitioner to provide services as a locum, assistant or deputy. The Bill will plug that loophole.
The measure removes a practitioner's right of appeal to the Secretary of State for Health but will leave in place the right of appeal that is provided by the Tribunals and Inquiries Act 1971 to the High Court on a point of law. The Franks committee recommended that appeals from decisions of all tribunals should he made to a court. The provision brings the NHS tribunal into line with good tribunal practice. Most importantly, the Bill will provide the tribunal with a power to suspend practitioners from providing family health services in wholly exceptional circumstances so as to protect patients.
The family health services authorities, which make representations to the tribunal, said that the continued inclusion of a practitioner's name in one of their lists would be detrimental to the provision of services in their areas. They will be able to ask the tribunal to suspend that practitioner from duty with immediate effect where it is felt that that is vital to protect patients. If granted, that order would remain in force until a tribunal was able to hear in full the representations made against the practitioner in question.
Some hon. Members may have thought that the power that I have outlined already exists. Of course it does for practitioners who are employed in hospital and community services. That is why, in the topical case of Dr. Kiberu, such steps were possible. But the key word is "employed". Family health services practitioners are not NHS employees. They hold a contract of service with the NHS and are regulated by family health services authorities. Their contracts of service do not contain a clause allowing for suspension or disqualification from practice, nor can the powers that are available to the professional regulatory bodies, which in any case are to protect professional standards, assist in the immediate removal of practitioners from family health services authorities' lists.
At present there is no means by which a practitioner can be removed from practice immediately, even when that appears to be essential to protect patients. It is plain that the NHS needs power to do that, although from what I have said about the rarity of tribunal hearings the House may appreciate that we do not expect the power of suspension to be used often. However, such cases arise when the conduct or practice of a practitioner may be such that fears are raised for the safety of his patients. In such cases, the NHS needs to be able to act quickly to secure above all else patient safety.
That is why the NHS is grateful to the hon. Gentleman for bringing the Bill forward. The amendment does not alter the substance of what the Bill seeks to achieve. It is the substance of the Bill and the purpose of the NHS tribunal that the amendment protects. As the hon. Gentleman said, we foresaw real difficulties if the scope of subsection 14(5) was not extended by an amendment to cover clause 3. As the hon. Gentleman has described, clause 3 removes the arrangements under which practitioners may appeal to the Secretary of State for Health against decisions to disqualify them. It goes on to provide health authorities with the power to implement tribunal directions that practitioners should he disqualified.
New health authorities will not be established until 1 April 1996. Therefore, without the amendment, family health services authorities would not be able to carry out directions of the national health service tribunal to disqualify practitioners. It follows that such directions made before 1 April 1996 would have been meaningless. Only the most serious cases are referred to the NHS tribunal. The hon. Gentleman brought this Bill before the House with patient safety at the forefront of his mind. I recall the eloquence with which he cited a case in his constituency where patients had, at the very least, been put at serious risk.
Clearly it would be nonsense if NHS tribunal directions to disqualify practitioners could not be implemented for however short a period as a result of a technicality. Bringing clause 3 under the scope of subsection 14(5) will put that right. It is simple and will ensure that the hon. Gentleman's intention in introducing the Bill and the House's earlier understanding of its provisions are preserved, so I am grateful to the hon. Gentleman for piloting this amendment and the Bill through the House. I hope that the House will view it as favourably as it has the Bill and that hon. Members will allow the Bill to complete its final stage, coupled with thanks to the hon. Gentleman.

Lords amendment agreed to.

Landlord and Tenant (Covenants) Bill

Lords amendments considered.

Clause 1

TENANCIES TO WHICH THE ACT APPLIES

Lords amendment: No. 1, in page 1, line 6, after ("Sections") and insert
("(Transmission of benefit and burden of covenants), (Transmission of rights of re-entry),")

Mr. Peter Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Deputy Speaker (Dame Janet Fookes): With this, it will be convenient to discuss also Lords amendments Nos. 10, 11, 16, 23, 28 to 30, 39, 61, 62, 74 and 88.

Mr. Thurnham: Today is a day that has been looked forward to by many tens of thousands of small business men and shopkeepers up and down the country, who long to be free of the worry of landlords pursuing them many years after they have vacated their premises.
I give thanks to my noble Friends the Earls of Courtown and of Northesk, who assumed stewardship of the Bill in another place. My noble Friend the Earl of Courtown introduced the Bill so successfully that he was quickly promoted to the Whips Office, leaving the Bill to be ably carried through by my noble Friend the Earl of Northesk, who also helped with another Bill that we have already debated today.
I am immensely indebted to my noble and learned Friend the Lord Chancellor who has been so instrumental in introducing the 89 amendments to my Bill, all of them useful and many crucial to the Bill's success. I hope that the amendments will commend themselves to the House.
I thank the Law Commission and parliamentary counsel for their enormous assistance, without which the Bill would certainly be a much less effective reform and would probably not have been able to progress this far. I am immensely grateful to my hon. Friend the Parliamentary Secretary, Lord Chancellor's Department for the excellent and inestimable work that he and his Department have done in securing agreement and in helping Bill on its way.
Finally, I thank the British Retail Consortium, which sponsored the Bill, and with its legal advisers, and the British Property Federation for all that it did in working out the package of additional changes that enabled the Bill to proceed on the basis of agreement and support on all sides, without which, as the private Member's Bill not drawn in the ballot, it could never have got off the ground.
When the Bill was last before the House, on 21 April, I expressed delight that it had got as far as Third Reading and I am overjoyed that we are now in the final stages of a difficult, but immensely valuable undertaking. The reforms that it will enact will benefit all sorts of tenants by removing the spectre of privity of contract liability from new tenancies, and will also introduce changes to help tenants under existing tenancies, changes for which tenants have been crying out for a long time. They will also provide for new tenancies a sensible and balanced


modification that will provide the property industry with the necessary control over investment to maintain market confidence, without the need for harsh restrictions.
The House would be assisted by an overview. Although the number and complexity of the amendments may appear daunting, none of them affects the policy aims of Bill which the House agreed earlier this year. The amendments will ensure that those aims are effectively met. Hon. Members will recall that the Bill proceeded in the House on the clear basis that changes would be incorporated in another place and the purpose of many of the amendments is specifically to make the necessary provision for those changes.
I shall stick closely to my notes because I appreciate that what is reported in Hansard can be referred to later by the courts. As was explained in the other place, the amendments fall into two categories. The first category comprises amendments that are necessary to give affect to the various elements of the agreed package put forward by the British Retail Consortium and the British Property Federation and accepted by the Government after consultation. Those amendments were tabled by my noble Friend the Earl of Courtown. The second category comprises amendments that are necessary to ensure that the Bill is complete and that it gives full effect to the recommendations of the Law Commission, which, it should be remembered, are at the heart of the reforms. Those amendments, many of which are technical, were tabled by my noble and learned Friend the Lord Chancellor. Amendment No. 1 and the others with which it is particularly linked fall into that second category.
Clause 1 makes it clear that certain provisions are to apply only to new tenancies and that others are to apply to both new and existing tenancies. Subsection (1), which amendment No. 1 alters, lists the provisions that are to apply only to new tenancies. The change is necessary because a number of extra provisions are needed to carry through effectively the Law Commission's recommendations and it is accordingly necessary to add them to the list, which amendment No. 1 does.
Amendments Nos. 10, 11, 30, 61, 62 and 88 in particular, together with amendments Nos. 23 and 28 and 29, which make provision for certain special cases, are aimed at ensuring that the Law Commission scheme, which the Government accepted for new leases, will work effectively in practice and are accordingly very detailed. I shall explain the framework and I believe that my hon. Friend the Minister will be better placed than me to clothe that framework with greater detail if necessary.

Mr. Eric Pickles: Perhaps my hon. Friend or my hon. Friend the Minister will comment specifically on amendment No. 10 and in particular on the idea both in subsection (2) and in subsection (3) that the concept of covenants is void unless "immediately before the assignment" was specified. I have had a case in my constituency where negotiations have been protracted and in many ways took place in two specific parts. Will my hon. Friend or the Minister clarify exactly what is meant by "immediate"? Would it have to be just before the assignment and just before the tenancy, or earlier in the negotiations, and if so, what is the limit?

Mr. Thurnham: I am interested to hear my hon. Friend's point. Nearly every right hon. and hon. Member

in the House has had constituents' cases that have given them concern. I am coming on to further detail on amendment No. 10. If those points do not cover my hon. Friend's question, I am sure that my hon. Friend the Minister will he able to cover his point.
This important group of amendments is necessary to avoid potential problems arising from the interface of the new regime with existing law governing the transmission of benefit and burden of covenants and their enforcement under privity of estate, which is contained in a unsatisfactory mixture of statutory provisions and common law rules. The amendments will provide a proper framework for new tenancies in the Bill rather than attempting the extremely difficult task of amending existing law consequentially.
Amendment No. 10 introduces a new clause that sets out the basic principle for the transmission of the benefit and burden of covenants for new tenancies. It includes provision originally contained in clause 7, which is accordingly deleted, and certain parts of sections 78 and 79 of the Law of Property Act 1925, which are to be preserved for tenancies—those sections not being affected otherwise than in relation to tenancies. Together with the new clause introduced by amendment No. 11, it also replaces sections 141 and 142 of the 1925 Act, which will accordingly not apply to new tenancies. Amendment No. 88 does the job of disapplying these statutory provisions in the case of new tenancies.
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The basic principles of the Law Commission's scheme, contained in subsection (1) of the new clause introduced by amendment No. 10, is that the benefit and burden of all landlord and tenant covenants of a new tenancy are annexed to the whole and to each and every part of the lease and reversion as appropriate and shall pass on an assignment of the whole or any part. There is, as the Law Commission recommended, no distinction between covenants which touch and concern the land and those that do not. The annexation to each and every part ensures that, in the case of an assignment in parts, all covenants are enforceable by and against each of the assignees.
The assignee of a lease or reversion respectively will be bound by the burdens and entitled to the benefits of the covenants, except where they did not bind the assignor—for example, because the covenant was limited in duration or the assignor had been released from it. Where only part of the interest is assigned, the assignee will be bound by the burdens and entitled to the benefits of the covenants only to the extent that they relate to the part assigned to him. There is a saving for cases where the assignor was not bound when he assigned only because of a waiver that was expressly personal and was not intended to benefit anyone else. In such cases, it will be appropriate for the assignee to be bound by the covenant in question. There is also a saving to enable the parties to a lease to provide expressly for covenants to be purely personal and for the benefit or burden not to pass on assignment, notwithstanding the basic principle above.
The new clause introduced by amendment No. 11 reproduces for new leases the existing rules governing the transmission of the landlord's rights of re-entry under a tenancy, which would not otherwise fit into the framework for new leases, as they arc not landlord covenants or tenant covenants.
Amendment No. 30 inserts a new clause which makes clear who may enforce the covenants benefiting either a landlord or a tenant under a new tenancy. Mortgagees of the reversion who are in possession and lessees of the reversion will, where they are entitled to rent and profits under the tenancy, be able to enforce and, as a corollary, have enforced against them the various rights and obligations of the landlord. Concomitantly, a mortgagee of the lease who is in possession will be able to enforce, and have enforced against him, the tenant's rights and obligations.
Amendment No. 61 introduces a further new clause to provide for another element of the framework to give full effect to the Law Commission's recommendations. This new clause makes it clear that an assignee shall have no rights or liabilities under a covenant of the tenancy in relation to anything occurring before the assignment. The new clause makes a saving for cases where the assignor expressly assigns his accrued rights to the assignee, which may be convenient in some cases as part of the bargain for the assignment. It also preserves the present position in respect of the landlord's rights of re-entry.
Amendment No. 62 ensures the completeness of clause 15, which makes provision for new leases concerning the effective release from any covenant occurring on assignment by virtue of the Act. Release on assignment will not affect any liability of the assignor for breach occurring before the assignment or any accrued rights of the assignor relating to a breach of the other party occurring before assignment. Where any person has taken on a liability parallel to that of the tenant, release on assignment to the tenant will release that person to the same extent.
Amendment No. 62 covers the case where a landlord or tenant assigns the whole of his interest but is not released, making it clear that any such assignment does not affect any liability of the assignor arising before the assignment.
Amendments Nos. 23, 28 and 29 provide—as I mentioned earlier—for the operation of the Law Commission's scheme in certain special cases. Amendments Nos. 23 and 29 cover the possibility that there may be another party to the tenancy other than the landlord and tenant—that is to say, a management company. Amendment No. 23 ensures that the procedure of clause 8 concerning apportionment of liability on assignment of part is available where it is a third party who is entitled to enforce the covenant in question. Amendment No. 29 introduces a new clause to make provision for the position of management companies in relation to the Law Commission's scheme, ensuring that the benefit and burden of covenants with management companies will pass and the provisions for releasing assignors and binding assignees will operate on assignments of the lease or reversion.
Amendment No. 28 introduces a new clause to make effective provisions for cases where an assignment is not lawful or voluntary, but takes place in breach of a covenant against assignment or by operation of law, such as passing to personal representatives on death of the landlord or tenant.
The Law Commission recommended that such assignments should not have effect to release the person parting with the interest from his rights and obligations under the lease, the possibility for misuse or unfairness to the other party being obvious. Such assignments should, however, as is the case at present, be fully effective to

pass the estate and accordingly to bind the assignee. The assignor will be released only on the next assignment that is not an assignment in breach or by operation of law.

The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor): I want to start by congratulating my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) on his Bill's progress into the final straight, which is in no small part due to his tireless efforts in holding to the essential principles of the reform, while facilitating and maintaining the reconciliation of conflicting interests whose clash prevented his earlier Bill from making progress. I also congratulate him on the determination and considerable persuasive skills that he has deployed in keeping this reform high on my agenda.
Before I move on to add some detail to the framework of my hon. Friend's explanation and, I hope, to add to our understanding of the amendments, I must put on record my appreciation of the Law Commission's enormous contribution in getting the Bill to this stage. Commissioners, officials and parliamentary counsel at the Law Commission have all given unstintingly of their time and expertise in assisting with the amendments that we are now considering. I am sure that my hon. Friend will not take it amiss if I say that the result of that work is a vastly improved measure, which comes to the House with the support of all sides in another place and which is thoroughly deserving of similar support in this House.
In order fully to understand the amendments and the way in which they fit into and enhance the Bill, it is necessary to have an overview of the scheme that the Law Commission has recommended and that is the underlying basis of this reform in relation to new tenancies. That scheme is full and detailed and, as a result, the amendments have also had to be full and detailed. Therefore, to proceed without a full explanation of the principal amendments would be to do the Bill and the House a disservice.
The guiding principle of the Law Commission's scheme is that all covenants and obligations between lessor and lessee should be enforceable between the landlord and tenant for the time being, with no distinction being drawn between covenants which touch and concern the land and other covenants. Thus, when the landlord's or tenant's interest is assigned, the assignee should become bound from the assignment by the whole package of rights and obligations as it bound his predecessor, including any variations. The assignee should not, however, take on any rights or liabilities in respect of any breach of covenant occurring prior to the assignment.
The corollary of this is that the assignor should cease to have any rights and obligations as from the assignment, but should not lose any accrued rights in respect of a breach by the other party prior to the assignment, and should likewise remain liable for any breach on his own part occurring prior to the assignment. The Law Commission did, however, recommend a difference in the position of landlords, which the Government accepted and which both Houses have agreed.
A landlord under a new tenancy who assigns the reversion will be released by a simple notice procedure which gives the tenant the right to argue that it would be unreasonable in the circumstances for the landlord to be released, with the final decision lying with a court in the case of a dispute. That is because tenants have no way of vetting the landlord's assignee and preventing assignment


to a weak or nominee assignee. The assignee's ability to perform the landlord's obligations might, in some cases, be very important.
Where only part of the landlord's or tenant's interest is assigned, the assignee is to become bound by the package of rights and obligations only to the extent that it relates to the part assigned, and is not to take on any rights or liabilities in respect of any breach of covenant which occurred prior to the assignment. Once more, the corollary is that the assignor should cease to have prospective rights and obligations in respect of the part assigned, but should retain any accrued rights relating to that part, and should also remain liable for any breach of his own in relation to that part before assignment. The assignor is, of course, to remain bound by the package of rights and obligations to the extent that they relate to the part retained by him.
Covenants do not always operate separately in respect of separate parts of the interest. In particular, covenants to pay money, such as rent or service charge, are commonly charged out of the whole of the property, and cannot, except in special circumstances, be identified as operating in respect of any one part or another. In the case of such an unattributable covenant, to use the Law Commission's term, the assignor will not be released from the covenant to any extent and will remain jointly liable with the assignor in respect of the whole of the property, albeit with the right of contribution between them.
The answer in such a case is for the assignor and assignee to agree an apportionment of liability between them and the Bill makes special provision for making such apportionment binding on the other party to the lease. The Bill also makes detailed provision for defining and identifying unattributable covenants. The original draft was difficult to understand in that respect, and there are several amendments to make it clearer.
That is the basic scheme which the original Bill set out to implement. Unfortunately, for a variety of reasons including the fact that all sides were agreed that the changes could not have retrospective effect, the original draft fell a long way short of implementing the scheme effectively. There were a number of matters which were not addressed, and as my hon. Friend the Member for Bolton, North-East said, many potential problems in the relationship of the new regime to the existing law concerning the transmission of the benefit and burden of covenants and their enforcement under privity of estate.
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The existing law is to be found not in one place but in a mixture of statutory provisions and common law rules, some of which date back to the 14th century. The law contains both gaps and duplication and has been criticised as being inconsistent, unclear or uncertain in several areas. Some amendment was vital for the Bill to be effective, and the choice was between leaving the existing law in place for new tenancies but undertaking consequential amendments or disapplying the existing law for new tenancies and amending the Bill to provide a complete and self-contained framework for new tenancies, giving full effect to the principles of the Law Commission's recommendations to replace the existing law. With the inestimable assistance of the Law Commission, the latter course has been chosen, so that, for new tenancies, the law will be found in one place.
I hope that the measure as amended will enjoy the whole-hearted support of the House.

Mr. Pickles: I apologise to my hon. Friend for interrupting his flow but I should like to return to the point I raised earlier. Given that the transmission of covenants is a serious matter and that negotiations can be protracted and, by their nature, can be abandoned and started up again, can he say exactly what is meant by "immediate"?

Mr. Taylor: My hon. Friend need not have feared that I would not address his point. I do not blame him for returning to it, because all too often Ministers at the Dispatch Box sit down without adequately discharging the inquiries of their hon. Friends. I would wish to discharge properly that of my hon. Friend.
The use of the expression "immediately before" is meant to address the circumstances that actually prevailed at the time of the assignment. If I, in the next moment, effected an assignment of a lease from party to A to party B, the expression "immediately before" would define the circumstances as they prevailed at that instant. I am prepared to give way if I have not dealt with my hon. Friend's inquiry. If he remains sedentary, I shall assume that he is content.

Mr. Pickles: I am content but I thank my hon. Friend for his courtesy.

Mr. Taylor: I am grateful.
Rather like my hon. Friend the Member for Bolton, North-East, I have rather stuck to my text today. In such a technical area, I am rather nervous of the case of Pepper. ?.Hart, recently decided by the Judicial Committee in the House of Lords, which suggests that in highly technical disputes such as those between landlord and tenant, lawyers may be scurrying for Hansard to read what hon. Members and Ministers said when a measure was being taken to the statute book. I have therefore been swayed by caution this morning and stuck to my text.
I extemporise only to say that I should like to thank among others, and in no particular order, the hon. Member for Brent, South (Mr. Boateng) who is here and has been a faithful supporter of the measure through all its stages. I would like to place on record my appreciation and that of my hon. Friend the Member for Bolton, North-East.
I also note the contributions of various parties who have worked with great good faith and assiduity to bring the matter to the stage that we have reached—very close to the statute book. The British Property Federation and the British Retail Consortium have worked heroically to close gaps, if I may put it that way. The smaller business community has also been extremely helpful in sounding out the many small shopkeepers and similar small traders with leasehold premises as to their views. The self-employed and small business organisations have been very helpful. I know that the big battalions will not mind the particular care that I wanted to take in making sure that the small battalions were also consulted.
I hope that the measure as amended will enjoy the whole-hearted support of the House. It remedies a position that, although of long standing, has increasingly become regarded as unfair and does so in a way that will maintain investment confidence while extending extra assistance to those who would not otherwise have benefited.

Mr. Paul Boateng: The Minister, kind and courteous as ever, expresses his thanks for the small


part that I have played in the smooth progress of the Bill. Let me in turn thank him for that and thank my noble friend Lord Irvine of Lairg for his role in the passage of the Bill through the other place. I also thank my hon. Friend the Member for Norwood (Mr. Fraser), who sadly is absent today but to whose heart I know the matter has long been especially close. He has been particularly co-operative in recent weeks to ensure its smooth passage.
Above all, the thanks of the House and of many generations to come who will be spared the injustices that have characterised this aspect of the law must deservedly go to the hon. Member for Bolton, North-East (Mr. Thurnham), who has worked assiduously on this subject for many years. There is not a soul present who has not at some time been approached by the hon. Member in order to have his ear, although never his arm, bent. We owe him a great debt of gratitude. I wish the Bill well in its remaining stages and look forward to its early introduction into law.

Lords amendment agreed to.

Lords amendment: No. 2, in page 1, line 7, after ("13") insert
("and section (Restriction of liability of former tenant where tenancy subsequently varied)")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): With this, it will be convenient to discuss also Lords amendments Nos. 4 and 57.

Mr. Thurnham: As I have already said, the Bill passed through the House earlier this year on the basis of a clear understanding that amendments would be tabled in another place to give effect to the four elements of the package agreed between the British Retail Consortium and the British Property Federation. This group of amendments gives effect to one of those elements, and I think that it would be helpful if I were to explain the package in outline before dealing with the amendments themselves as it is the spirit of realistic compromise and desire to make early progress represented by the package that has enabled the Bill to reach this advanced stage.
The package may be described as having two parts. The first enables landlords under new leases to have that degree of extra control over assignment of the lease which will enable investment confidence to be maintained without resort being made to the draconian instrument of absolute covenants against assignment. The second comprises three changes aimed principally at assisting former tenants under existing leases who will not be released from privity of contract. As I said, the package of changes has attracted support from all parts of the property industry and Parliament. I hope that its translation into provisions of the Bill will commend itself to the House.
The first element comprises the amendment of section 19 of the Landlord and Tenant Act 1927 to enable landlords and tenants to agree in advance the terms under which future assignments can be made. It is aimed at ensuring that landlords will be able to preserve covenant strength which underpins investment value and will apply only to new commercial tenancies. The other three elements of the agreement are aimed at assisting tenants

under existing leases rather than addressing a particular need for new commercial leases. They will accordingly apply to new and existing tenancies of all types.
The second element improves protection under clause 13 which requires a landlord to give notice to his former tenant or the former tenant's guarantor within a fixed period of certain sums falling due if he is subsequently to have the right to enforce payment of such a sum against the former tenant or guarantor. That period was fixed in the Bill as originally drafted at nine months but is to be reduced to six months.
The third element limits the liability of the former tenant in respect of payments due to certain types of changes in the lease taking place after the former tenant parted with it. The final element will enable the former tenant who is made to pay for another's default to call for an overriding lease so that he may have some measure of control over his position.
The group of amendments will give effect to the third element of the package that I have just outlined. While amendment No. 1 added provision to the list in clause 1 of those applying to new tenancies only, amendment No. 2 adds to the list a provision applying to new and existing tenancies. The provision in question is the third element of the package dealing with liability in respect of subsequent variations in the lease. Amendment No. 4 simply changes the word "applies" in subsection (2) to "apply" to reflect the fact that there will, as a result of the amendments to give effect to the package, be more than one provision applying to new and existing tenancies. The substantial amendment for which they pave the way is amendment No. 57.
Amendment No. 57 introduces a new clause immediately after clause 13 of the Bill as it left this place. The new clause builds on clause 13, which opens by setting out the circumstances in which a former tenant may be liable in respect of a tenancy that he has assigned. The new clause provides that where a former tenant is under a liability in those same circumstances and the terms of the lease have been varied after he assigned the lease and after commencement of the Act, the former tenant shall not be liable to pay any sum to the extent that it is referable to that variation, provided that the variation was one which the landlord had the absolute right to refuse to make when it was made.
There may be cases where the landlord originally had an absolute right to refuse certain types of variation but where an intervening variation of the lease has taken away that absolute right. In such cases, it would not be fair for the tenant to be liable to pay any additional sum referable to the subsequent variation which was one that the landlord did have the absolute right to refuse when the tenant parted with the tenancy.
The provision turns on whether the landlord had the absolute right to refuse to make the variation, because it is not reasonable for a tenant to be expected to have in contemplation that after he assigns the lease, the landlord will change its terms so as to allow something that the tenant was absolutely prohibited from doing. On the other hand, where the variation is one which the landlord had only a qualified right to refuse to make, it is reasonable to expect the outgoing tenant to realise that the lease may be so varied after he has parted with it and to hear that in mind when making contingent provision.
In deciding whether the landlord's right to refuse the variation was absolute, it will be necessary to have regard not only to the terms of the lease but, for example, to the law generally, including in particular any statutory provision. For example, while the terms of the lease may absolutely prohibit certain tenant's improvement which the tenant is nevertheless allowed to make by virtue of the Landlord and Tenant Act 1927, any such changes, even though the rent may be affected, cannot be said to be variations coming within this clause as the landlord could not refuse to allow them.
The clause will accordingly cover such matters as variations to the nature of the premises, user, extra space for an increased rent and so on, but it will not prevent the landlord from being entitled to recover from a former tenant an increase of rent on a rent review for which the lease made provision when the former tenant held the lease, except to the extent that the increase refers to a variation of the sort covered by the clause.
I have further comments to make but, in view of the time, I shall conclude my remarks on this group at this point.

Mr. John Fraser: I back the Bill and want it to reach the statute book as soon as possible. Indeed, I once presented an earlier version of the Bill. I do not intend to speak again, but the hon. Member for Bolton, North-East (Mr. Thurnham) described the compromise that has been reached and I wish to place on record one aspect of that compromise with which I am not happy. I am sorry that my hon. Friend the Member for Brent, South (Mr. Boateng) is not here to listen to what I have to say.

Mr. Boateng: I am behind my hon. Friend.

Mr. Fraser: I beg my hon. Friend's pardon. Obviously, he will hear what I have to say.
The foundation of my concern is that there is not equality of power between landlord and tenant. Where a property company or a pension fund has a whole portfolio of properties and one lease goes bad and somebody does not pay, the risk can be spread across the pension fund or the freeholder's investment. When original lessee liability arises, it is not usually in relation to only one person and it cannot be laid off in the same way as the vast interests of most property developers. Therefore, the balance of power is not equal.
If I were in charge of the matter or if Labour were in government, I would not have contemplated the modification of section 19 of the Landlord and Tenant Act 1927. That section has served the commercial world very well indeed and leases are freely assignable without much restriction. In my view that should continue. It is good for the function of the market and for the rights of tenants.
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There is, however, a compromise, and I do not wish to stand in its way. If it does not work, I expect the next Labour Government further to amend section 19 of the Landlord and Tenant Act 1927 so that there is no unreasonable restriction on the way in which tenants can assign. I can envisage landlords abusing that right if the market allows them to do so. If it is a seller's market, there will be abuses and conditions will be built into

assignment that will be unduly onerous and may be impossible to achieve. I hope that does not happen, but if it turns out that way, I hope that the next Labour Government will correct that malfunction.

Mr. Boateng: My hon. Friend the Member for Norwood (Mr. Fraser) speaks from enormous personal and professional experience as a diligent constituency Member of Parliament and a practising solicitor. His concerns about the disparity of power between the parties to a lease were well expressed and well taken by the Labour party.
My noble and learned Friend Lord Irvine of Lairg has expressed elsewhere a real understanding of the concerns of my hon. Friend the Member for Norwood, who can be assured that we shall be monitoring carefully that aspect of the Bill in terms of ensuring that the inequality in the relationship between landlord and tenant does not lead to injustice. However, we take the view that it would be wrong to prejudice the speedy passage into law of the legislation at this stage by seeking to do anything that would imperil it, although I well understand the concerns expressed by my hon. Friend in that regard.

Mr. Fraser: I wish only to place on record that I had not realised that my hon. Friend was behind me when I raised the matter, and I am grateful to him.

Mr. Boateng: There is no way that I would ever be absent from the Chamber while my hon. Friend was raising a matter of concern to me and to the Labour party, and I am grateful to him.

Mr. John M. Taylor: I sympathise with the remarks of the hon. Member for Norwood (Mr. Fraser) about the mismatch between the big property landlords and the small tenants of lock-up shops who are often granted leases on the basis of take it or leave it, sign here and pay the landlord's costs as well. I accept that, but the hon. Gentleman, in the generosity of his spirit and the breadth of his experience will agree that the mismatch was the burden of privity that is removed in the context of the compromise to which he referred.
It is my opinion and I put it to the House that the compromise itself was not unreasonable. One is often restrained to what is possible and what we have here is possible. It represents a great deal of reconciliation of interests and good faith.
I am grateful to my hon. Friend the Member for Bolton, North-East for his full and helpful explanation of Lords amendments Nos. 2, 4 and 57. I cannot better explain their detailed operation, so I shall be brief. I very much welcome the group of amendments which effect a change that tenants and their advisers have been seeking for a long time. It has been generally accepted that abrogation of the privity-of-contract doctrine could be undertaken only for new tenancies, but for many that acceptance was tinged with regret that former tenants, under existing tenancies, would thereby be left exposed.
That, and the other elements of the property industry package aimed at existing tenancies, represents a significant advance for existing tenants without any adverse effect on investment confidence. I do not think that hon. Members will be surprised to learn that, when the Lord Chancellor's Department consulted on the package, there was unanimous support for that element.
As my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) has outlined the package as a whole, I should also say that the package as a whole was supported by the great majority of consultees, who considered it to be balanced and reasonable. That view has been fortified by the Bill's progress.

Mr. Ken Livingstone: On a point of order, Mr. Deputy Speaker. May I ask you to use your power to suspend the sitting to allow a senior Minister to be brought here to answer grave allegations? I have been given a series of confidential letters from the leader of Brent council, Councillor Blackman, to Ministers at the Department of the Environment and officials at No. 10 Downing street, which thank the Government for rigging the council's grant assessment for 1994 to aid it in the election, and asking them to do the same in 1995 so that the party can hold Brent in the event of a by-election.

Mr. Deputy Speaker: That is not a matter for the Chair, but I have no doubt that the hon. Gentleman's comments have been noted.

Lords amendment agreed to.

Lords amendment: No. 3, in page 1, line 7, after ("13") insert
("and sections (Right of former tenant or guarantor to overriding lease) and (Overriding leases: supplementary provisions)")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Lords amendments Nos. 6, 58 and 59.

Mr. Thurnham: This is another group of amendments giving effect to an element of the agreed package of changes that has gained across-the-board support for the Bill. They introduce the final element of the package that I outlined earlier, giving former tenants and their guarantors, under both new and existing leases of all types, the possibility of gaining a degree of control over the liability when they are called on to make good the default of a subsequent tenant, by calling for an overriding lease. Lords amendment No. 3 does the same as Lords amendment No. 2, but in respect of that different element of the property industry agreement, making it clear that the element is to apply to both new and other tenancies.
Lords amendment No. 6 is necessary to maintain the agreed policy that privity-of-contract liability is to be abolished prospectively and not retrospectively. It makes it clear that the definition of a new tenancy—which is dealt with in Lords amendments Nos. 5 and 7—is to be subject to a special rule that is part of the overriding lease provisions. That rule states that an overriding lease will derive its status from the lease under which the person claiming it has been called on to make good the default of the subsequent tenant. The overriding lease will not be a new tenancy if the tenancy under which the former tenant finds himself having to pay is not the new tenancy. The amendment is necessary to prevent inconsistency between clause 1 and the overriding lease provisions, which would cause significant practical problems and would cut across the policy of limiting the abolition of privity of contract to new tenancies.
The two substantial amendments for which the others pave the way are Lords amendments Nos. 58 and 59, which introduce two new clauses after clause 13 and immediately after the new clause introduced by Lords

amendment No. 57. This element of the property industry agreement addresses a particularly difficult problem, and a way in which the doctrine of privity of contract can be seen to operate especially unfairly.
At present, although a former tenant may have to pay, and continue to pay, sums in respect of a lease that he signed long ago, he may be unable to regain possession, and may thus have nothing to show for his payments—unless he was sophisticated enough to reserve some kind of right of re-entry when negotiating the lease, or the defaulting tenant becomes insolvent, the lease is disclaimed on bankruptcy or liquidation and the former tenant is able to have the lease revested in him.
The provisions introduced by the amendments address the problem by enabling a former tenant or guarantor who has to pay in respect of a subsequent tenant's default to call for an overriding lease to be granted to him so that he can pursue remedies directly against the defaulting tenant if he is still in occupation, or take over possession and make use of the property so that he can set off the return against his liability. Former tenants will thus have some means of gaining a measure of control, rather than the helplessness which they so often feel in the face of such unexpected liabilities.
Amendment No. 58 introduces the first new clause, which sets out a former tenant's right to call for an overriding lease, the circumstances in which it arises and the terms of the overriding lease and the mechanics for its grant. Amendment No. 59 introduces the second new clause, which makes supplementary provision including such matters as the special rule to which I have referred governing whether an overriding lease is a new or existing tenancy, the question what happens if there is an unjustifiable delay in granting it and more technical matters as the land registration position.
I have further notes on this group of amendments, but in view of the time and as a courtesy to the House I shall conclude here.

Mr. John M. Taylor: I am grateful to my hon. Friend for his full and clear explanation of these important amendments. This element of the property industry package will deal with what are some of the hardest cases caused by the privity of contract doctrine. Hon. Members have on numerous occasions asked me what might be done for constituents who have found themselves paying rent for another's occupation where the landlord is unconcerned and the premises may be going to wrack and ruin with no prospect of the constituent even being able to go into possession to stop the disrepair getting worse. The amendments will provide the remedy which, it must be admitted, was lacking, and I am grateful to the property industry bodies for coming forward with them. I commend the amendments to the House.

Lords amendment agreed to.

Lords amendment No.4 agreed to.

Lords amendment: No. 5, in page 1, line 8, leave out from ("if") to end of line 12 and insert
("it is granted on or after the date on which this Act comes into force otherwise than in pursuance of—
(a) an agreement entered into before that date, or
(b) an order of a court made before that date.")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendment No. 7.

Mr. Thurnham: The amendments in this group are much shorter and simpler than those which the House has so far considered, but they are very important. Clause 1 concerns which provisions of the Bill are to apply to new tenancies and which to both new and existing tenancies, so it must also define a new tenancy.
The definition of a new tenancy which was in the Bill as it left this House came in for trenchant criticism, and amendments Nos. 5 and 7 accordingly carry out extensive revision. Amendment No. 5 makes clear that a new tenancy is one granted on or after the date on which the Act comes into force, unless it is granted in pursuance of an agreement entered into before that date or a court order made before that date.
Amendment No. 7 replaces subsection (4) of the original draft of the Bill with three new subsections which put beyond doubt certain matters which the draft either does not cover, or does not cover satisfactorily. The first new subsection covers the variations of leases which change the nature of the demise and so take effect as a surrender and regrant and produce a fresh tenancy. The basic principle of subsection (3) is applied so that the fresh tenancy will be a new tenancy for the purposes of the Act if the agreement for the variation is entered into after the Act came into force, but an existing tenancy if the agreement predated commencement.
The next new subsection applies the same principle to tenancies granted in pursuance of options, the treatment of which in the existing draft was particularly criticised. If the option was granted before the date on which the Act comes into force but is exercised after that date, the tenancy which is granted pursuant thereto will not be a new tenancy. The final new subsection covers a tenant's rights of first refusal to the grant of a new tenancy which might not necessarily otherwise be included in the "option", and ensures that the same basic principle will apply.

Mr. John M. Taylor: As my hon. Friend said, this group of amendments is important. I would go so far as to say that they are pivotal. The part of clause 1 which they seek to amend essentially makes transitional provision which is necessary because of the decision that it would not be possible to implement the Law Commission's recommendations for existing leases. That decision was based partly on the need to avoid considerable damage to confidence in the property market and to investments held by such investors as pensions funds, unit trusts and the like, with which not only bigger concerns but many individuals' fortunes are bound up.
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The decision was also based on the principle that agreements freely entered into should be interfered with as little as possible. That principle underlies the detailed approach to defining a new tenancy. Had the definition simply stated that a new tenancy was one granted after commencement of the legislation, it would have ignored the fact that in a significant number of cases the essential agreement that should not be interfered with was entered into before commencement. In the case of new tenancies

granted pursuant to court order, the court order is analogous to the concluded agreement. I support the amendments.

Lords amendment agreed to.

Lords amendments Nos. 6 and 7 agreed to.

Clause 2

COVENANTS TO WHICH THE ACT APPLIES

Lords amendment: No. 8, in page 2, line 2, after ("disposals);") insert—
("( ) paragraph I of Schedule 6A to that Act (covenants requiring redemption of landlord's share);")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendment No. 9.

Mr. Thurnham: The amendments are very technical and can be explained briefly. The part of clause 2 which is amended—as recommended by the Law Commission—excepts from the operation of the Act certain covenants entered into by tenants of local authorities who exercise their right to buy, to prevent them from making unjustified profits from an early sale so that they will continue to be bound by those covenants notwithstanding the new regime.
Lords amendments Nos. 8 and 9 make the necessary provision for excepting from the Act a further such covenant which was not picked up in the first draft of the Bill.

Mr. John M. Taylor: As my hon. Friend said, amendments Nos. 8 and 9 are entirely technical. I hope that the House will accept them as such.

Lords amendment agreed to.

Lords amendments Nos. 9 to 11 agreed to.

Clause 6

PROCEDURE FOR SEEKING RELEASE FROM A COVENANT UNDER SECTION 4 OR 5

Lords amendment: No. 12, in page 3, line 29, leave out ("before") and insert
("either before or within the period of four weeks beginning with the date of")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Lords amendments Nos. 13 to 15, 17 to 22, 24 to 27 and 68.

Mr. Thurnham: These amendments refine certain procedures under the Act involving notices so that they will operate better in practice. The first amendment introduces changes to clause 6 of the Bill as it left this House. As my hon. Friend the Parliamentary Secretary, Lord Chancellor's Department, mentioned earlier, it was a major plank of the Law Commission's recommendations that landlords under new tenancies should not be released automatically from the burdens and benefits of the landlord covenants of the tenancy, but would be so released under a procedure involving service of a notice on the tenant, giving the tenant the opportunity to argue


that it would not be reasonable for the landlord to be released. Provision to that effect is set out in clauses 4 and 5 of the Bill as it left the House, which have now become clauses 6 and 7 in the amended version. Those clauses have not been amended, and the principle underlying them has been accepted.
Clause 6 of the Bill as it left this House, which is clause 8 as amended, makes provision for that notice procedure. The original draft provided for the landlord to serve the notice on the tenant before the assignment from which he sought to be released and for the tenant to have four weeks from service of the notice to object to the landlord's being released. The landlord is to be released, as from the date of assignment, if there is no objection within four weeks or if there is an objection but the court declares it to be reasonable for the landlord to be released.
Amendments Nos. 12 to 15 make practical changes to the procedure as set out in the Bill. Those changes go hand in hand with amendments to clauses 8 and 9, which, as my hon. Friend the Minister mentioned, provide for apportionment of liability under certain covenants between assignor and assignee to become binding on the other party to the lease if a similar notice procedure is gone through. Since the changes are of just as much benefit for the apportionment notice procedure, amendments Nos. 24 to 27 to clause 9 simply carry through the approach of the amendments to clause 6. Amendments Nos. 17 to 22 make changes to the wording of clause 8, which are necessary to pave the way for the amendments to clause 9.
The first of the practical changes is brought about by amendment No. 12, which removes the requirement that the notice be served before the assignment and allows it to be served before or up to four weeks after it. Amendment No. 13 adds wording to reflect the fact that the notice may be served after assignment.
The second practical change is to provide for the tenant to be able to say that he has no objection and thereby to short-circuit the process, rather than requiring the landlord to wait for four weeks before he knows that he is released in a case in which the tenant is unconcerned. The tenant is also allowed to withdraw a notice of objection at any time. Amendments Nos. 14 and 15 effect that change.
Clause 9 provides for an essentially identical notice procedure for the ability to make an apportionment agreement binding in this way, as opposed to the procedure, and a number of small changes to the wording of clause 8 are necessary to reflect the fact that notices will be able to be served after assignment as well as before.
Clause 8 makes provision cover cases of assignment of part only of a landlord's or tenant's interest, where there is an "unattributable" covenant, as my hon. Friend the Minister described. In such a case, it will be necessary for the assignor and the assignee to apportion liability between themselves. The clause provides that such an agreement can be made binding on the other party to the lease through the notice procedure provided for in clause 9. It is essentially the same as the procedure provided for under clause 6 and amendments Nos. 24 to 27 make the same provision for the procedure in clause 9 as amendments Nos. 12 to 15 for clause 6.
Amendments Nos. 17 to 22 are technical and carry out some minor changes to the wording of clause 8 to reflect the changes in clause 9.
Finally, amendment No. 68 is consequential on the fact that the recipient of a notice under these procedures will have new options other than objecting or saying nothing and it requires the notice to tell the recipient what the options are.

Mr. John M. Taylor: Once more, these amendments are a good example of how reviewing the Bill with a fresh eye has brought dividends in provisions that will improve its practical operation. The amendments are entirely consistent with the Law Commission's underlying policy and it is in agreement with them.
Originally, it was intended only to make the change enabling the recipient of a notice to indicate agreement so as to shorten matters. As part of the review process, however, it was questioned whether it was necessary for the notice to be served before the assignment in question when, particularly in the case of notices by landlords under clause 6, there might be practical benefits to the person serving the notice in allowing it to be done for a limited period after the assignment.
There are cases in which confidentiality is very important to the landlord when he assigns, so he cannot afford to make his negotiations public by serving notices before assignment. The tenant has no control over the assignment and will be interested only in whether the new landlord is a secure prospect, such that it is not unreasonable for the assigning landlord to be released. In those circumstances, it was decided that it would not be to the tenant's disadvantage if the notice were not served until after the assignment. As part of that process, it became apparent that no purpose would be served by having the matter go to court if the recipient of the notice were to register his objection and then change his mind. So provision was added enabling an objection to be withdrawn at any time.
Taken together, the amendments will enable the parties to save trouble and expense and will minimise interference with commercial confidentiality. It may assist the House if I add a brief word about notices for the purposes of the Bill generally. Notices under clauses 6, 9 and 13 are to be in a form prescribed by statutory instrument, which will tell the recipient in clear and simple language what the notice is about and what may be done in response. That reflects the Law Commissions' recommendation that the notices should be in a standard and informative form because of their importance to the recipient.
The sanction for failing to serve a notice in the prescribed form will be that the notice is ineffective for its purpose. It is not, however, intended that the server of the notice should be thus penalised for minor departures from the prescribed form. It is intended that the prescribed forms are as simple and therefore as easy to use as possible.

Lords amendment agreed to.

Lords amendments Nos. 13 to 30 agreed to.

Clause 12

TENANT GUARANTEEING PERFORMANCE OF COVENANT BY ASSIGNEE

Lords amendment: No. 31, in page 6, line 25, after first ("a") insert ("tenant")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Lords amendments Nos. 32 to 36.
This important group of amendments revises and refines the operation of clause 12 as it left this House. That clause deals with the Law Commission's recommendation that when a tenant under a new tenancy is released on assignment in accordance with clause 3, it should nevertheless be possible for the landlord, as a condition of the licence to assign, to ask the tenant to guarantee performance of the tenant covenants of the tenancy by his immediate assignee, but no more.
Two important propositions must be implemented effectively by the clause: the proposition that the outgoing tenant should guarantee performance by his successor; and the proposition that the guarantee should cover no more than that. Clause 12 in the original draft set out to give workable effect to those propositions but came in for criticism that it failed to do so effectively. The amendments seek to ensure that the clause is fully effective.
In considering this clause, it should be borne in mind that a landlord will be able to seek a guarantee from an outgoing tenant only if the lease gives the landlord control over an assignment because, in the absence of such control, the lease will be freely assignable by the tenant under general principles without the need to refer to the landlord. Control will arise either by way of an absolute covenant against assignment, which bans it all together, in which case the landlord will be free to demand such a guarantee as the price for waiving the ban, or by providing assignment only with the landlord's consent.
Subsections (1) to (3) of the clause cover those propositions with only minor technical amendments. The remainder of the clause covers the limits on such an authorised guarantee agreement, as the Bill terms it, and the provisions which the landlord can seek to include in it to ensure its effectiveness for his purposes.
The amendments strike the balance between ensuring that the guarantee is effective when the landlord most needs it and ensuring that it cannot be used as a device for subverting the main reform by retaining the effective privity of contract liability once the assignee has assigned.
Amendment No. 31 is entirely technical and inserts the word "tenant" in subsection (1) of clause 12 to make it absolutely clear that it is only tenant covenants, the performance of which may be guaranteed. Amendment No. 32 removes words from subsection (2) consequential on the later amendments, which make the limits of an authorised guarantee agreement absolutely clear. Amendment No. 33 makes it clear that the guarantee will not be effective unless it complies with the new clearer provision introduced by the later amendments.
Amendment No. 34 will simply introduce words to subsection (3) to make it clear that there is no question of an authorised guarantee agreement arising unless the lease contains some form of covenant against assignment.
Amendments Nos. 35 and 36 carry out wholesale revision of the latter part of the clause and are extremely important because without them it could not safely be said that the clause properly gives effect to the two necessary propositions that I outlined earlier.
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Amendment No. 35 deletes the greater part of subsection (4) and replaces that deleted with clearer and more all-embracing provisions setting the limit for an authorised guarantee agreement, and subject to that what such an agreement may include to ensure that it is effective in the circumstances when it will be most needed.
Any provision that is aimed at tying in the outgoing tenant to any kind of liability that is in any way referable to the lease he has assigned will, regardless of its terms, be of no effect once the assignee himself is released by reason of his having assigned. That deals with the proposition that the guarantee should cover no more than the performance of the tenant covenants by the assignee.
Any such provisions will not be void ab initio, however. That is of importance for the new subsection (4A), which will be inserted by the amendment. It deals with the proposition that the guarantee should effectively cover performance by the assignee.
The problem for landlords is that the strict technical rules relating to guarantees generally will result in the guarantor of a tenant being discharged if the tenant becomes insolvent and the lease is then disclaimed by the receiver or trustee in bankruptcy. That is just when the landlord needs the guarantee the most.
The law in general permits several ways around this difficulty, such as provisions whereby the guarantor agrees to take on the liability of a sole or principal debtor that is not discharged in the circumstances, or agrees to take on a new lease replacing the residues of the disclaimed lease. The new subsection expressly permits these devices to enable landlords to ensure that the guarantee remains effective when most needed. That is subject, however, to the general limitation inserted in subsection (4). The effect is that the devices will be available if the assignee becomes insolvent and the lease is disclaimed before he assigns, but will cease to have any effect once the assignee signs and is released in accordance with clause 3.
Amendment No. 36 completes the revision of clause 12 by introducing two new subsections to cover the position of excluded assignments and the position where a tenant who entered into an authorised guaranteed agreement becomes tenant again under the operation of that agreement. In relation to excluded assignments, where a tenant who made an excluded assignment and therefore remains bound is released on the next assignment, he may, in effect, be asked by the landlord to give the guarantee that he would have been asked to give if his assignment had not been an excluded one and had been effective to release him.
The position depends on whether the tenant making the next assignment enters into an authorised guarantee agreement. If he does, the landlord will be able to require the tenant who made the excluded assignment also to enter into an authorised guarantee agreement on terms corresponding to those of the assigning tenant's agreement so that they guarantee the next tenant jointly.
The tenant who entered into an authorised guarantee agreement may become tenant again either by taking back the assigned lease on a disclaimer following his assignee's insolvency or by entering into a new lease under the authorised guarantee arrangement. In those circumstances, when a tenant next assigns, it will be possible to enter


into another authorised guarantee agreement. While this might at first blush seem onerous for a tenant whose assignee is weak, it is entirely appropriate because the failed assignee will have been the tenant's choice. It may have been only the prospect of the authorised guarantee agreement that persuaded the landlord to consent to the assignee.

Mr. John M. Taylor: Once again, I am grateful to my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) for his full and clear explanation of these important amendments. The authorised guarantee agreement is a crucial pillar of the Law Commission's recommendations. These amendments are accordingly very important and I commend them to the House.
I should like to explain a matter that arises from amendment No. 36, on which a little concern was expressed in another place. It is the possibility of a landlord being able to require a tenant who made an excluded assignment to enter into an authorised guarantee agreement when the person to whom the excluded assignment was made himself assigns the lease. That is entirely appropriate, because the person to whom the excluded assignment was made may be someone to whom the landlord could reasonably have objected. To allow release without the possibility of an authorised guarantee agreement might enable tenants to escape liabilities that it would be entirely reasonable for them to retain.
The point on which concern was expressed related to the position of charity trustees. Consequential on amendment No. 36, the first schedule to the Bill will make a consequential amendment to the Trustee Act 1925 which will prevent the possibility of an authorised guarantee agreement in such circumstances bedeviling the administration of estates or trusts and will deal with the concerns that were expressed about charity trustees.

Lords amendment agreed to.

Lords amendments Nos. 32 to 36 agreed to.

Clause 13

RESTRICTION ON LIABILITY OF FORMER TENANT FOR RENT OR SERVICE CHARGE

Lords amendment: No. 37, in page 7, line 14, after first ("a") insert ("tenant")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Lords amendments Nos. 38, 40 to 56, 69 to 72, 75 and 79.

Mr. Thurnham: Clause 13 applies to both new and existing leases and makes provision to ensure that former tenants who are still under liability in relation to a lease which they have assigned should be given notice within a fixed period of any arrears that become due and which they may find themselves having to pay. The liability may arise because of privity of contract liability or an excluded assignment or an authorised guarantee agreement. This "problem notice" will alert a former tenant to his potential liability and will enable him to make provision against the liability rather than as at present leaving him living in blissful ignorance until he is suddenly presented with a bill which might cover a long period of arrears.
When the Bill left the House it fixed the period at nine months but, as I have said, one of the elements in the agreed package of additional changes involves the reduction of that period to six months. There is an amendment to accord with the commitment to the House to table amendments to give effect to that package. There is a dauntingly large number of amendments to the clause. To some extent, that reflects the clause's importance as a measure to assist former tenants and as the springboard for the variations and overriding lease clauses. It is also the result of a large number of minor technical amendments which are necessary to follow through a single change, which I shall now explain.
The essence of the six-months rule, as it has now become, is that the landlord should serve notice of sums which arise under the lease as fixed or liquidated sums. That is because it is too difficult and onerous for the landlord to attempt to do that for matters such as dilapidations, which by their nature are difficult to quantify as they arise. The wording of the clause as it left the House limited it to rent and service charges, but it has been amended to recognise that there are other such liquidated sums whose amount will be fixed as they fall due—for example, specified payments for each fixed period that the tenant is in breach of a particular covenant. There is no reason why the former tenant should not have notice of such sums as well as notice of rent and service charges.
No fewer than 11 amendments in the group relate to that change. Amendments Nos. 38, 40 to 42, 49, 51, 53, 54 and 56 provide that instead of referring to "rent or service charge" the clause refers to a "fixed charge", which is defined as covering rent, service charges corresponding to the well-settled definition in the Landlord and Tenant Act 1985, and sums payable as liquidated amounts in the event of breach of a covenant. Amendment No. 37 does for this clause what amendment No. 31 does for clause 12, making it clear that tenant-only covenants are covered.
When the Bill left this House, clause 13 did not deal at all with the question of interest on the sum which is due. Amendment No. 45 rectifies that omission so that the former tenant will be given some warning of the fact that interest is accruing on a sum due, so that he can take that into account in making provision to meet his potential liability.
Although that is of course of benefit to the tenant, it is necessary to avoid placing too onerous a burden on the landlord, who is accordingly not expected to calculate the interest accrued and keep updating it for the former tenant's benefit. Rather the amendment requires the landlord simply to warn the former tenant in the notice of the fact that interest is accruing and the terms on which it is accruing. That simple warning will ensure that he is able to recover the interest should he sue the former tenant in due course, while giving the former tenant sufficient information to assess his likely liability and make provision accordingly.
The remaining amendments also insert provision consistent with the policy underlying the six-month rule, but simply not dealt with in the original draft. It was accepted as part of the property industry package that the protection of the six-months rule should be extended not only to former tenants, but to their guarantors, who are just as exposed and likely to suffer from a sudden and unexpected demand payment covering a long period of arrears as former tenants.
Furthermore, if no provision were made for guarantors, it would be open to a landlord to sue a former tenant's guarantor for payments that the landlord could not recover from the tenant, not because the tenant could not meet the payment, but because the landlord simply did not bother to serve notice on the tenant, and found it easier to sue the guarantor because no notice was required. I am sure that the House will agree that such a possibility would be most unfair and would tend to defeat the whole object of the six-month rule.
Amendment No. 46 accordingly plugs that gap with a new subsection (2A), making the same provision for guarantors as subsection (2) makes for former tenants. Amendments Nos. 48 and 50 consequentially ensure that references in subsection (3) to subsection (2) are amended so that they refer also to the new subsection (2A).
Amendment No. 47 follows through by expressly applying to guarantors as well to former tenants. That amendment inserts a new subsection to make good another omission, this time to assist landlords in the task of serving notice. It is possible that the landlord may in good faith have served on a former tenant a "problem notice" specifying a particular sum, but that, for reasons outside the landlord's control and not due to any carelessness on his part, the sum due is determined to be greater, but is not so determined until after the six months is up.
For example, there might be a rent review outstanding at the time that the landlord serves the notice, which subsequently determines the rent to be higher on a backdated basis, but that does not occur until more than six months after the rent payment due. It would not be fair for a landlord in such a position who had not made a mistake through carelessness in specifying the sum, to be unable to recover the difference between the sum in the notice and the higher sum that the determination entitled him to.
The amendment makes provision enabling the landlord to preserve his right to recover the difference in such cases by serving a supplementary notice within three months of the final determination. To ensure that the tenant is not taken by surprise, the landlord is required to give warning in the original notice that the liability is subject to the possibility of upward determination in that way, and only if he does so will he be able to recover the difference in the circumstances outlined.
I have mentioned the fact that clause 13 acts as a springboard for the variations and overriding lease clauses, and those clauses make reference to authorised guarantee agreements and new tenancies, which in the original draft were defined only for the purposes of clause 13. Amendment No. 52 accordingly removes the definition of "authorised guarantee agreement" in subsection (4) of clause 13, and amendment No. 75 reproduces it as a general definition for the whole Bill in clause 19, which becomes clause 28 as amended. Amendment No. 55 and amendment No. 79 do the same thing for the definition of "new tenancy".
Finally, there are a number of amendments to clause 18 of the Bill as it left the House—clause 27 as now amended—which are consequential on the changes to clause 13. Clause 18 makes provision for notices that are required to be served under the Act, and in particular specifies certain matters that the notice must contain and

provides that notices not substantially in the prescribed form will not be effective. Amendment No. 69 extends to "problem notices" under clause 13 the requirement already applicable to notices under clauses 6 and 9 for the notice to include an explanation of its significance to the former tenant or guarantor. It is clearly important for the former tenant or guarantor to have it spelled out to him that the notice preserves the landlord's right to sue for the sum stated and interest if appropriate, and that is arguably more important than for the recipient of a notice under clauses 6 or 9.
Amendments Nos. 70 and 71 extend to problem notices under clause 13 the sanction of ineffectiveness that is applicable to notices under clauses 6 and 9 which are not substantially in the prescribed form. Amendment No. 72, which is entirely technical, removes a limitation in a reference to clause 13 which has become inappropriate in the light of the amendments to that clause.

Mr. John M. Taylor: Once again, my hon. Friend the Member for Bolton, North-East has fully and clearly explained a complex network of detailed and technical amendments and I am most grateful to him. I commend the amendments to the House and wish only to add a little extra detail concerning the service of notices.
As I mentioned earlier, the form of notices will be prescribed by statutory instrument and the intention will be to make the notices as clear and as simple as possible, both so that the recipient can understand at a glance what the notice is about, what it means for him and what he can do, and so that complying with the requirement to serve a notice substantially in the prescribed form is as simple for the serving party as it can reasonably be, without sacrificing the objective of getting the information to the recipient.
It has been asked in some quarters whether the six-months rule will require the landlord to serve a notice within six months of each time the particular payment falls due, or whether a single notice the first time rent is not paid on time would preserve the landlord's right to sue for that and all subsequent unpaid instalments.
I wish to take this opportunity to state that, in my view, the wording of the clause clearly has the former effect, and that that is the intended effect. The most a landlord will actually be required to do is to serve a notice within six months of each instalment of a fixed charge becoming due. For example, to preserve the right to sue for a full year's rent, two notices a year will be required. That can hardly be said to be excessively onerous. There may, of course, be other fixed charges that fall due on different dates, so that a landlord who took a scattergun approach might end up serving numerous notices. However, even in those circumstances the burden is unlikely to be significant.
The advantages for the tenant are clear. He will have, in effect, a continuing report on the state of play and if he receives a series of notices indicating that a series of instalments of rent are unpaid, he will be in a position to realise that action may be called for on his part.
Another question that has been raised concerns service and the question of former tenants whose present address is unknown to the landlord. It has been suggested that in such a case the landlord may be unable to find out where to serve the notice until it is too late and may thus lose


the right to enforce against the former tenant. In fact, clause 18 borrows the well-settled provisions of section 23 of the Landlord and Tenant Act 1927, which were borrowed by the Landlord and Tenant Act 1954 in the same way and have been applied for the purposes of that Act for more than 40 years. It permits service by registered post to the last known abode of the intended recipient of the notice. It will be a matter for a prudent tenant or guarantor who moves to ensure that the landlord has an up-to-date address for the service of notices, otherwise the tenant will risk the possibility of the landlord fulfilling his duty and preserving his right to sue by serving on the last known address, but the tenant not actually seeing the notice.
As a final practical point, it should be borne in mind that, if a tenant has disappeared so completely that there is no known address for service, it will be in any event extremely difficult, if not impossible, to locate him for the purposes of enforcing a liability. I beg to support the amendments.

Lords amendment agreed to.

Lords amendments Nos. 38 to 59 agreed to.

New clause

Lords amendment: No. 60, after clause 14, to insert the following new clause—Imposition of conditions regulating giving of landlord's consent to assignments—
After subsection (1) of section 19 of the Landlord and Tenant Act 1927 (provisions as to covenants not to assign etc. without licence or consent) there shall be inserted—
(1A) Where the landlord and the tenant under a qualifying lease have entered into an agreement specifying for the purposes of this subsection—

(a) any circumstances in which the landlord may withhold his licence or consent to an assignment of the demised premises or any part of them, or
(b) any conditions subject to which any such licence or consent may be granted,
then the landlord—

(i) shall not be regarded as unreasonably withholding his licence or consent to any such assignment if he withholds it on the ground (and it is the case) that any such circumstances exist, and
(ii) if he gives any such licence or consent subject to any such conditions, shall not be regarded as giving it subject to unreasonable conditions;
and section 1 of the Landlord and Tenant Act 1988 (qualified duty to consent to assignment etc.) shall have effect subject to the provisions of this subsection.
(1B) Subsection (1A) of this section applies to such an agreement as is mentioned in that subsection—

(a) whether it is contained in the lease or not, and
(b) whether it is made at the time when the lease is granted or at any other time falling before the application for the landlord's licence or consent is made.
(1C) Subsection (1A) shall not, however, apply to any such agreement to the extent that any circumstances or conditions specified in it are framed by reference to any matter falling to be determined by the landlord or by any other person for the purposes of the agreement, unless under the terms of the agreement—

(a) that person's power to determine that matter is required to be exercised reasonably, or

(b) the tenant is given an unrestricted right to have any such determination reviewed by a person independent of both landlord and tenant whose identity is ascertainable by reference to the agreement,
and in the latter case the agreement provides for the determination made by any such independent person on the review to be conclusive as to the matter in question.
(1D)In its application to a qualifying lease, subsection (1)(b) of this section shall not have effect in relation to any assignment of the lease.
(1E)In subsections (1A) and (1D) of this section—
(a) "qualifying lease" means any lease which is a new tenancy for the purposes of section 1 of the Landlord and Tenant (Covenants) Act 1995 other than a residential lease, namely a lease by which a building or part of a building is let wholly or mainly as a single private residence; and
(b) references to assignment include parting with possession on assignment."")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.
This amendment is the single most important amendment made in the other place. It has already been referred to by the hon. Members for Norwood (Mr. Fraser) and the hon. Member for Brent, South (Mr. Boateng). It is not going too far to say that this amendment provided the momentum that has got the Bill so close to the statute book and which, I fervently hope, will take it all the way there.
The amendment, as was said in the other place, represents the essence of the compromise, and the basis of the agreement between differing interests in the property industry which has enabled the Bill to get this far. It was on the basis of a specific commitment to making amendments in the other place to give effect to that agreement that the Bill was allowed to pass that House. I am pleased to say that with this amendment, that commitment is fulfilled.
Throughout the passage of the Bill, it has been clearly stated that it could not reach the statute book without agreement. I firmly believe that the agreement represented by the amendment is realistic and balances the competing interests and objectives in a way that has already enabled it to be supported by both sides in both Houses and with the eloquently expressed blessing of the Opposition Front Bench in another place.
Hon. Members will appreciate from my explanation of previous amendments, that while this amendment is the backbone of the property industry agreement, the agreement goes far beyond simply trading landlord support for the Bill for greater control of over assignment. As a result of the agreement, tenants have the prospect of several additional measures of real benefit to those liable under existing leases.
Some explanation of the amendment's progress will help the House. The amendment appeared twice in another place. It was first moved in Committee when it was debated but withdrawn in response to a well-argued plea for time to consider it in more detail. After mature consideration, the amendment was moved again on Report, when it met with support from both sides. Full and compelling reasons for accepting it were given by Lord Irvine of Lairg.
I should make it clear that the arguments in favour of the amendment, while they are compelling in the case of commercial leases, do not apply to residential or


agricultural leases. The amendment does not apply to those leases, although such leases will benefit from all the other provisions of the Bill.
It should also be made clear that, because the purpose of the amendment is to ensure that investment strength can be maintained notwithstanding the loss of privity of contract which buttresses it at present, it will apply only to new leases. It will affect only assignment, leaving the law relating to underletting and so on untouched.
The background has been explained in detail both in this House and in another place, but I believe that restatement is justified. An earlier attempt to implement the Law Commission's recommendations, as accepted by the Government, failed because it did not contain provision to the effect of this amendment, which is crucial to the success of the present attempt.
Landlords were not satisfied that current law governing their ability to control assignments could be relied upon to protect their interests under the new regime without privity of contract. Their fear, which I considered to be well founded, was that, whereas at present they have a sound head covenant, on the basis of which investment can be attracted, under the new regime they would be left with assignees of steadily declining covenant strength and no other recourse. Investment prospects and confidence would decline accordingly.
The reason for that is that, where a lease contains a qualified covenant against assignment—one which permits the tenant to assign only with the landlord's consent—section 19(1) of the Landlord and Tenant Act 1927 provides that the landlord be required not to withhold his consent unreasonably. Without the fallback of privity of contract, the landlord's safeguard in vetting prospective assignees of the lease becomes crucial to the maintenance of the investment value of the landlord's interest.
The historic approach of the courts, however, has led landlords to believe that any extra controls which it might in commercial terms be reasonable for them to impose in new leases to preserve investment strength would nevertheless be struck down by the courts as unreasonable in the context of section 19. Given the need for certainty in property investment, tenants have been able to see that such fears and uncertainties might drive landlords to wholesale adoption of absolute covenants against assignment, or banning assignment altogether in new leases so that tenants would have to underlet or submit to the landlord's absolute discretion as the only way out.
The amendment provides a middle way, making it less likely that landlords will ban assignments completely if they are allowed to define what they require of an assignee. Providing a middle way also makes it more likely that conditions will be properly tailored to the lease in question because, while it will be possible for landlords to insist on stringent conditions, they will need to think carefully before doing so in leases that are long enough to contain a rent review.
A landlord who insists on driving a hard bargain may well find that others with comparable property have been more relaxed and have to accept a lower rent on review. Without the middle way, it would be more likely that all landlords would see little alternative but to ban assignments, so there would be no differentiation on review.
Considerable effort has been expended to meet the challenge of doing as much as necessary to give landlords the security required to underpin investment and development while not straying any further from the spirit of section 19 of the Landlord and Tenant Act 1927 than is needed to secure that objective. The amendment introduces a new clause which amends section 19 of that Act to increase the possibility of landlords' control over assignment compared to qualified covenants against assignment under the existing law, but short of allowing sole discretion to the landlord a landlord. A landlord who still requires complete control and is prepared to take the consequences in terms of lower rental values on rent review will of course still be able to seek an absolute covenant against assignment.
The solution finally agreed and accepted, and supported in this place and—after mature consideration—in another place, is that it should be possible for the parties to a lease containing a qualified or fully qualified covenant against assignment to agree between them the criteria that should govern the question whether the landlord would consent to any assignment and that those criteria should not be susceptible to being overturned by a court on the grounds that they, or the landlord's refusal based on the tenant's failure to fulfil them, are unreasonable.
As I said, immense effort has been expended to ensure that the change does only what is necessary to enable the parties to preset the criteria for assignment without fear of their being void for unreasonableness while otherwise retaining, as far as possible, the effect of section 19 and the effect of the Landlord and Tenant Act 1988 which builds on it. The parties will not simply be able to sidestep section 19 altogether so as to place the decision whether to consent to assignment in the landlord's undefined discretion as that is no more than an absolute covenant against assignment in disguise.
The amendment inserts five new subsections after subsection (1) of section 19 of the 1927 Act. The main provision is the new subsection (1A) which specifically enables the landlord and tenant to enter into an agreement to govern assignment. The landlord and tenant are to be able in such an agreement to specify the terms or conditions on which the landlord will grant or withhold consent.
Where conditions are pre-agreed in that way, the landlord is not to be taken to be refusing consent unreasonably if he does so on the ground that the conditions have not been met. If it is in dispute whether the conditions have been met, it will be for the landlord to show that they have not, just as at present he has to show that he is not withholding consent unreasonably. Furthermore, for the purposes of the Landlord and Tenant Act 1988, if he gives consent subject to a condition that was pre-agreed in that way, he is not to be taken as giving consent subject to an unreasonable condition.
1.30 pm
Section 19 of the 1927 Act and the provisions of the Landlord and Tenant Act 1988 which build on it, will not thereby be rendered completely ineffective, and they will continue to have effect—as they do at present—to the extent that pre-agreed conditions are not exhaustive. Therefore, if the tenant fulfils all the specified conditions, but the landlord is still dissatisfied with the assignee and wishes to withhold consent, the landlord will have to show that, in so withholding consent, he is not being unreasonable.
The landlord will still have to fulfil duties under the 1988 Act to consent, or to give reasons for withholding consent, within a reasonable time. Landlords will thus have the security of knowing that they can set out specific requirements as to matters such as the assignee's business and financial status to ensure that the assignee is a sufficiently secure prospect for the landlord's investment to be safeguarded without having to go so far as an absolute covenant against assignment.
New subsection (1B) allows the agreement to be in the lease or in any other instrument, for example a side letter representing parallel negotiations to those for the lease, and allows it to be at the time of the lease or at any other time. It will, of course, most often be the case that the agreement forms part of the lease or, as I have said, a parallel matter which is part of the same package. There will also, however, be cases where the parties will wish to enter into an agreement at another time to reflect changing conditions. I should add that the agreement must have been entered into before the tenant actually applies to the landlord for consent to assign.
New subsection (1C) makes provision for a different condition from those that I have been discussing so far. I have dealt with conditions that require definite objectively verifiable facts to exist when numerous conditions must cumulatively be satisfied, but, when taken together, indicate clearly what type of assignee will be acceptable. Such a condition might be that a prospective assignee should have net profits before tax in the most recent accounts of three times the rent, or perhaps that the rest of the building in question has been and remains let.
Subsection (1C), on the other hand, is aimed at those cases in which the landlord wishes to reserve some final discretion or judgment as to the suitability of the assignee, notwithstanding that a series of specific conditions is fulfilled. It would not do simply to allow the landlord to agree with the tenant a condition reserving the final determination to the landlord, or indeed to another person who might be the landlord's associate, as that would reproduce the effect of an absolute covenant against assignment in a disguised form.
Conditions which inherently or expressly depend on the landlord's or any other person's determination, and therefore his discretion, judgment or opinion rather than being objectively proved, will survive only if one of two conditions is met. Those conditions are that the terms of the agreement provide either that the determination, if disputed, may be referred to an independent person or that the element of judgment rests with the landlord and that the landlord has committed himself to exercise it reasonably. For example, that would allow for matters which of their nature require an opinion or judgment to be formed capable of conclusive resolution by an independent expert, thus balancing the need in some cases for an element of judgment or discretion against the need for certainty.
New subsection (1D) deals with new building leases. Under section 19(1)(b) of the 1927 Act, unless the landlord imposes an absolute covenant against assignment in such a lease, he cannot stop the tenant assigning without consent more than seven years before the end of the term, no matter what the terms of the lease may otherwise say. With the removal of the privity of contract liability for new leases, that complete lack of control over assignment cannot be justified for building leases, so the

new subsection ensures that new building leases are to be no different from new commercial leases generally in respect of assignment.
New subsection (1E) makes it clear that, as I have said, the changes do not apply to residential leases. They will not apply to agricultural leases in any event, as section 19 does not apply to such leases, which have always been subject to a different regime for assignment. The new subsection also covers the fact that a covenant against parting with possession may be broken in a number of ways, of which assignment is one. It ensures that, in the case of such a covenant, assignment is covered by the new provisions but the other ways of parting with possession are not.
I realise that I have spoken for some time on a single amendment, but I hope that the House will accept that its vital importance justified that.

Mr. John M. Taylor: I am grateful to my hon. Friend the Member for Bolton, North-East for his comprehensive explanation of this crucial amendment. I appreciate that this element of the agreed package of changes will result in a certain shift in the balance of power, but I am firmly convinced that it represents a necessary and sensible compromise which, when taken in the round, can be seen to do the greatest amount of good for the greatest number and to enable it to be done in the shortest possible time.
Some reservations have been expressed about the effect of this element of the property industry agreement. The Law Commission had reservations, and expressed them eloquently, but accepted that the reform could make its way to the statute book only by agreement, and that this element opened the way to that necessary agreement. The commission's commitment to implementing that reform, notwithstanding its reservations, cannot be doubted, and I believe that its attitude is right.
As I said in a previous debate on the Bill, there were initial reservations in the Government on the basis that the smaller commercial tenants, in particular, could not clearly be said to have had their say. It was for that reason that it was thought appropriate to consult on the package. The response indicated that all sides of the property industry supported the compromise, and a notable feature was the number of respondents who praised the compromise as a realistic way forward and urged prompt action to put it into effect.
I have before me a letter, dated 7 July, from the chief executive of the Forum of Private Business, Mr. Mendham. With commendable worldliness and wisdom, he writes:
This Bill represents a compromise, but one which represents a significant advance on the present position. Not only does the Bill abolish privity for future leases, but also significantly improves the equity of existing leases. The Bill has the strong support of business tenants. When questioned by FPB over 72 per cent. of tenants supported the Bill with less than 15 per cent. opposed.
That is very encouraging. My hon. Friend and I, and, indeed, the Government, are grateful to the Forum of Private Business for its research and information.
The amendment received support from all quarters in another place—not simply because it was presented as a property industry agreement, but on the basis of mature consideration of its operation in practice, and the prospects for tenants and landlords if the reform reached the statute book in its present form. I believe that the


assessment of the amendment in the other place hit the nail on the head, and I commend it to the House.

Lords amendment agreed to.

Lords amendments Nos. 61 to 63 agreed to.

Clause 16

AGREEMENT VOID IF IT RESTRICTS OPERATION OF THE ACT

Lords amendment: No. 63, in page 8, line 41, leave out ("or modify") and insert (", modify or otherwise frustrate")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Lords amendments Nos. 64 to 67.

Mr. Thurnham: The amendments are technical, and they revise and refine the provisions of clause 16 as it left this House. The amendments are important, as they contain anti-avoidance provision to stop the reforms simply being circumvented. The amendments do not change the approach of the original provision or the approach recommended by the Law Commission, but refine the provisions so that they are properly effective. They will also prevent arguments to the effect that they outlaw certain other matters which the Act elsewhere envisages being permitted.
The Law Commission, aware of the boundless ingenuity of those in the property industry, recommended provision in general terms to catch any device aimed at subverting the Act. Subsection (1) contains the principal provision which is, in accordance with that recommendation, in general and all-embracing terms.
Amendments Nos. 63 and 64 amend the wording of subsection (1) to ensure that it is sufficiently all-embracing to catch various devices which might be attempted as ways of circumventing the Act. Amendment No. 65 deletes subsection (2) of clause 16 as it left the House. The subsection makes cross-reference to provisions which authorise and guarantee the agreements, and it is necessary to delete it to make way for a revised and refined provision to similar effect which is made by amendment No. 67.
Amendment No. 67 inserts a new subsection after subsection (3) which makes it clear that an agreement is not outlawed to the extent that it is an authorised guarantee agreement, but that anything in an authorised guarantee agreement which falls foul of subsection (4) of clause 12 as amended is void to the extent that it does so.
Amendment No. 66 deletes subsection (3) of clause 16 as it left this House, and replaces it with a revised and refined version. The subsection was originally inserted to reflect concerns that it might be argued that absolute or qualified covenants against assignment amounted to provisions which would modify the operation of the Act as far as release on assignment is concerned, which would therefore be held to be void. The new subsection makes it clear that such a covenant against assignment is not void by reason of this clause, but goes on to make clearer than the original draft that any conditions which might be attached to consent or required to be fulfilled before

consent is given would not survive scrutiny under this clause if they were such as to subvert the operation of the Act.

Mr. John M. Taylor: As my hon. Friend has said, the amendments are technical and I do not propose to detain the House for any length. However, there are two points on which it would assist the House if I offered a brief explanation, since questions have been asked in some quarters. First, it has been suggested in some quarters that subsection (1)—both in its original form and as amended—might render void any agreement between parties to a lease that certain covenants should be expressed to be of limited duration, such as—to take an obvious example—a time-limited undertaking.
This is argued on the basis that such limitation would modify the operation of the provisions providing for an assigner to be released on assignment. I wish to reiterate what was said in another place on this matter—that that will not be the case, since time-limited covenants, once the period has expired, will not be covenants which bind the assignor immediately before assignment. It is thus not possible to say that the limited duration in any way falls foul of clause 16.
The second point demonstrates the ingenuity to which my hon. Friend referred. It is suggested that an avoidance device for landlords might be to abuse the provisions concerning excluded assignments by insisting that tenants cannot assign but must instead sublet for a longer term than the tenant's own term. It is argued that this will take effect not as a sub-letting but as an assignment by operation of law so that the tenant will not be released and neither will any of his assignees.
The degree of lateral thinking in that suggestion is remarkable, but this is precisely the sort of device at which clause 16 is aimed. The point was in the minds of those who produced the provisions in question. Such a device would be a clear sham aimed at subverting the effect of the Act. I am sure that the courts will be quick to spot such shams as the Act is tested and to strike them down.

Lords amendment agreed to.

Lords amendments Nos. 64 to 72 agreed to.

Clause 19

INTERPRETATION

Lords amendment: No. 73, in page 10, line 5, at end insert ("(unless the context otherwise requires)")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Lords amendments Nos. 76 to 78 and 80 to 84.

Mr. Thurnham: Again, these amendments are technical and in the main consequential on changes made earlier in the Bill. They amend clause 19 of the Bill as it left this House, which sets out definitions and provisions for interpretation of the Bill as a whole. A number of them fall to be revised and some additional ones are added.
Lords amendment No. 37 inserts a general provision which qualifies the entire list of definitions so that they do not apply if the context otherwise requires. That enables the definitions to be simpler and clearer.
Lords amendment No. 76 clarifies the term "collateral agreement", which has an important place in the amendments which provide the framework for transmission of covenants to give effect to the Law Commission's recommendations. In particular, the amendment makes it clear that a collateral agreement may be entered into after the creation of the tenancy and need not be contemporaneous with it.
Lords amendment No. 77 makes it clear that the term "covenant" is to encompass matters contained in collateral agreements, which is in accordance with the Law Commission scheme.
Lords amendment No. 78 provides, for the avoidance of doubt, a definition of "landlord" and "tenant" for the purposes of the whole Bill. Lords amendment No. 80 restores wording which was originally recommended by the Law Commission that had been excluded from the Bill as it left this House. The reinserted wording excludes a mortgage term from the definition of tenancy for the purposes of the Bill. That is because it remains possible for there to be a mortgage by demise, and because it is inappropriate for there to be any question of the Bill's provisions applying to any such mortgage.
Lords amendments Nos. 81 and 82 deal with covenants to pay money such as a service charge in cases in which only part of a person's interest is assigned. A money covenant will not generally be attributable to one part or another of the property, so that it will be necessary for the assignor and assignee to agree an apportionment of liability. However, there are exceptional circumstances in which such a covenant is specifically attributable so that apportionment is not necessary. These are defined in subsection 3 of clause 19, which becomes clause 27 as now amended. The amendments provide new wording to make it clearer that subsection 3 deals with an exception and to make the application of the exception clearer.
Lords amendment No. 83 extends the definition of landlord and tenant for the purposes of the Bill to put beyond doubt a point which emerged during revision of the Bill and consideration of clause 10. It covers the possibility of joint landlords or tenants and makes it clear that any reference to the landlord or tenant means all those who jointly constitute the landlord or tenant, as the case may be. Clause 10 was intended to cover persons who had failed to secure release, their assignees and the like. It was not intended to cover joint tenants or landlords. The amendment ensures that clause 10 will, as intended, have no application as between joint tenants or landlords.
Lords amendment No. 84 covers certain cases such as sale via mortgagee, where the landlord's or tenant's interest changes hands, but does not do so by the landlord's or tenant's action or automatically by operation of law. Such a transfer is to be treated as an assignment by the landlord or tenant as appropriate, so that the assignor will be released and the assignee bound and so forth in accordance with the relevant provisions of the Act.

Mr. John M. Taylor: As my hon. Friend said, this group of amendments is technical, but I am grateful to

him for his explanation and do not think that I can add anything. Once again, I commend the amendments to the House.

Lords amendment agreed to.

Lords amendments Nos. 74 to 84 agreed to.

Clause 21

REPEALS AND CONSEQUENTIAL AMENDMENTS

Lords amendment: No. 85, in page 11, line 1, at beginning insert—
("(1ZA) The enactments specified in Schedule (Consequential amendments) are amended in accordance with that Schedule, the amendments being consequential on the provisions of this Act.")

Mr. Thurnham: I beg to move, That this House doth agree with the Lords in the said amendments.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Lords amendments Nos. 86, 87 and 89.

Mr. Thurnham: This is the final group of amendments. Once more, they are technical amendments, some of which have already been touched on, so I shall be brief.
Clause 21, which becomes clause 30 as amended, provides for appeals and consequential amendments. It will, I think, come as no surprise to hear that the detailed revision of the Bill has resulted in there being more consequential amendments than before and in some rearrangement of those already in clause 21.
Amendment No. 85 paves the way for the rest. It provides for a new schedule of consequential amendments and amendment No. 86 deletes the consequential amendments in subsection (2) of clause 21, since those are moved to that schedule. Amendment No. 87 makes consequential changes to the references in subsection (3) of clause 21.
Finally, amendment No. 89 introduces the new schedule of consequential amendments, which contains, in particular, consequential amendments to the Landlord and Tenant Act 1954 and the Trustee Act 1925, to which reference has already been made.
I am grateful to the House for listening to me for such a long time. I hope that hon. Members will agree that it was worth it.

Mr. John M. Taylor: My hon. Friend's explanation of this final group of technical amendments has been as helpful as all his earlier explanations, and I am grateful for his hard work today. I commend these amendments and the Bill to the House.
As our work comes towards a conclusion I must say that I have been privileged to take part in bringing this legislation to the statute book and to ending the unfairness of the privity rule in landlord and tenant legislation. Many years ago—longer ago than I would care to confess—I studied the law of landlord and tenant as a young law student, although I never really mastered it, and encountered the operation of the doctrines of privity of contract and of estate. As a young man, I thought them profoundly unfair.
I then practised for more than 20 years as a provincial high street solicitor and used to warn those of my clients who were about to sign commercial leases, frequently for lock-up shops, of the operation of this rule. I used to


reflect with them on how unfair I thought it was but they must know about it and accept its operation with their eyes open and with every care and vigilance.
Having seen the rule as a student and worked with it as a practitioner of the law, I find myself at the Dispatch Box as a legislator, or a junior member of the Government, preparing to give the rule of privity the coup de grace. I hope that the House will forgive me if I take a certain pleasure in being in this place at this time doing this thing.
Some of those with an interest in the commencement date of these provisions may be within earshot. The commencement date is no trivial matter because a whole industry with its advising professions will have to come to terms with this change in the law. Many learned articles will have to be written, read and disputed, seminars held and lectures given before the profession and the industries involved—the property, pension and retail industries—come to terms with one of the most important changes in English property law since 1925. This country's commerce is very much about property law and always has been. In 1925 great changes took place under the auspices of that remarkable man, Lord Birkenhead.
I am about to take the lid off the jar and say when I think that commencement might be. It is a matter for the Lord Chancellor who has an order-making power in this regard, but I believe that the commencement date will be 1 January 1996, which, fittingly, will be the 70th anniversary of the Birkenhead legislation.

Mr. Thurnham: I thank you, Mr. Deputy Speaker, and through you I thank Madam Speaker, for the opportunity to bring this Bill to the House and, I hope, to the statute book.
Today is a red letter day and 1 January 1996 will obviously be the most important day on which many small businesses and shop keepers will be released from the fear that their landlords may pursue them for many years afterwards. I am grateful to have had the opportunity to bring a Bill, which was not lucky in the ballot, to a successful conclusion.

Lords amendment agreed to.

Lords amendments Nos. 86 to 89 agreed to.

Civil Rights (Disabled Persons) Bill

As amended (in the Standing Committee), considered.

Mr. Harry Barnes: On a point of order, Mr. Deputy Speaker. May I refer you to the statement that Madam Speaker made on 24 January when the Government were introducing the Disability Discrimination Bill. She pointed out that there was a problem about whether the Civil Rights (Disabled Persons) Bill and the Disability Discrimination Bill covered similar ground and said that, if so, there would be difficulties in allowing the second Bill to proceed. It was ruled that the Bills were sufficiently dissimilar to allow the second Bill, the Civil Rights (Disabled Persons) Bill, to proceed.
May I refer you, Mr. Deputy Speaker, to page 469 of "Erskine May" on new clauses? On the possibility of clauses being ruled out because they clash with clauses in a different Bill, it says:
Similarly a new clause offered at the consideration stage of one bill was ruled out of order when it substantially repeated the provisions of another bill of the same session, the consideration stage of which had been adjourned.
New clause 1, which we are about to deal with, is sufficiently similar to clause 7 of the Disability Discrimination Bill to create that problem. Furthermore, other new clauses that we shall discuss in the first batch deal with the Secretary of State taking over the role of the disability rights commission. Those are in line with the Government's Bill, which is now before the other place. The problem crops up in later clauses, too. Should not a number of the clauses currently before us be removed on the ground that they form part of the Disability Discrimination Bill?

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Madam Speaker has selected the new clauses and amendments for debate. I have no doubt that in doing so she took careful account of the sort of problems that the hon. Gentleman has mentioned. We shall now proceed with the Bill.

New clause 1

EXEMPTION FOR SMALL BUSINESSES

'.—(1) Nothing in Part III applies in relation to an employer who has fewer than 20 employees.

(2) The Secretary of State may by order amend subsection (1) by substituting a different number (not greater than 20) for the number for the time being specified there.'.—[Mr. Burt.]

Brought up, and read the First time.

The Minister for Social Security and Disabled People (Mr. Alistair Burt): I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this, it will be convenient to discuss the following: New clause 2—Codes of practice prepared by the Secretary of State—

'.—(1) The Secretary of State may issue Codes of Practice containing such practical guidance as he considers appropriate with a view to—
(a) eliminating discrimination against disabled persons in the field of employment; or
(b) encouraging good practice in relation to the employment of disabled persons.

(2) The Secretary of State may from time to time revise the whole or any part of a Code and re-issue it.

(3) Without prejudice to subsection (1), a Code may include practical guidance as to—
(a) the circumstances in which it would be reasonable, having regard in particular to the costs involved, for an employer to be expected to make accommodation in favour of a disabled person; or
(b) what steps it is reasonably practicable for employers to take for the purpose of preventing their employees from doing, in the course of their employment, anything which is made unlawful by this Act.

(4) A failure on the part of any person to observe any provision of a Code does not of itself make that person liable to any proceedings.

(5) A Code is admissible in evidence in any proceedings under this Act before an industrial tribunal, a county court or a sheriff court.

(6) If any provision of a Code appears to a tribunal or court to be relevant to any question arising in any proceedings under this Act, it shall be taken into account in determining that question.

(7) In this section and section (Further provision about Codes issued under section (Codes of practice prepared by the Secretary of State)) "Code" means a Code issued by the Secretary of State under this section and includes a Code which has been revised and re-issued.'.

New clause 3—Further provision about Codes issued under section (Codes of practice prepared by the Secretary of State)—

'.—(1) In preparing a draft of any Code under section (Codes of practice prepared by the Secretary of State), the Secretary of State shall consult such organisations representing the interests of employers or of disabled persons in, or seeking, employment as he considers appropriate.

(2) Where the Secretary of State proposes to issue a Code, he shall publish a draft of it, consider any representations that are made to him about the draft and, if he thinks it appropriate, modify his proposals in the light of any of those representations.

(3) If the Secretary of State decides to proceed with a proposed Code, he shall lay a draft of it before each House of Parliament.

(4) If, within the 40-day period, either House resolves not to approve the draft, the Secretary of State shall take no further steps in relation to the proposed Code.

(5) If no such resolution is made within the 40-day period, the Secretary of State shall issue the Code in the form of his draft.

(6) The Code shall come into force on such date as the Secretary of State may appoint by order.

(7) Subsection (4) does not prevent a new draft of the proposed Code from being laid before Parliament.

(8) The Secretary of State may by order revoke a Code.

(9) In this section "40-day period", in relation to the draft of a proposed Code, means—
(a) if the draft is laid before one House on a day later than the day on which it is laid before the other House, the period of 40 days beginning with the later of the two days, and
(b) in any other case, the period of 40 days beginning with the day on which the draft is laid before each House,
no account being taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.'.

New clause 6—Appointment by Secretary of State of advisers—

'.—(1) The Secretary of State may appoint such persons as he thinks fit to advise or assist him in connection with matters relating to the employment of disabled persons.

(2) Persons may be appointed by the Secretary of State to act generally or in relation to a particular area or locality.

(3) The Secretary of State may pay to any person appointed under this section such allowances and compensation for loss of earnings as he considers appropriate.

(4) The approval of the Treasury is required for any payment under this section.

(5) In subsection (1) "employment" includes self employment.

(6) The Secretary of State may by order repeal section 17 of the Disabled Persons (Employment) Act 1944 (national advisory council and local advisory committees).'.

New clause 7—Amendment of Disabled Persons (Employment) Act 1944—

'.—(1) Section 15 of the Disabled Persons (Employment) Act 1944 (which gives the Secretary of State power to make arrangements for the provision of supported employment) is amended as set out in subsections (2) to (5).

(2) In subsection (1)—
(a) for "persons registered as handicapped by disablement" substitute "disabled persons";
(b) for "their disablement" substitute "their disability"; and
(c) for "are not subject to disablement" substitute "do not have a disability".

(3) In subsection (2), for the words from "any of one or more companies" to "so required and prohibited" substitute "any company, association or body".

(4) After subsection (2) insert—
(2A) The only kind of company which the Minister himself may form in exercising his powers under this section is a company which is—
(a) required by its constitution to apply its profits, if any, or other income in promoting its objects; and
(b) prohibited by its constitution from paying any dividend to its members."

(5) After subsection (5) insert—
(5A) For the purposes of this section—
(a) a person is a disabled person if he is a disabled person for the purposes of the Civil Rights (Disabled Persons) Act 1995; and
(b) "disability" has the same meaning as in that Act."

(6) The provisions of section 16 (preference to be given under section 15 of that Act to ex-service men and women) shall become subsection (1) of that section and at the end insert—
and whose disability is due to that service.
(2) For the purposes of subsection (1) of this section, a disabled person's disability shall be treated as due to service of a particular kind only in such circumstances as may be prescribed.

(7) The following provisions of the Act of 1944 shall cease to have effect—
(a) section 1 (definition of "disabled person");
(b) sections 6 to 8 (the register of disabled persons);
(c) sections 9 to 11 (obligations on employers with substantial staffs to employ a quota of registered persons);
(d) section 12 (the designated employment scheme for persons registered as handicapped by disablement);
(e) section 13 (interpretation of provisions repealed by this Act);
(f) section 14 (records to be kept by employers);
(g) section 19 (proceedings in relation to offences); and
(h) section 21 (application of Act as respects place of employment, and nationality).

(8) Any provision of subordinate legislation in which "disabled person" is defined by reference to the Act of 1944 shall be construed as if that expression had the same meaning as in this Act.

(9) Subsection (8) does not prevent the further amendment of any such provision by subordinate legislation.'.

New clause 8—Government appointments outside Part III—
'.—(1) Subject to regulations under subsection (3), this section applies to any appointment made by a Minister of the Crown or government department to an office or post where Part III does not apply in relation to the appointment.


(2) In making the appointment, and in making arrangements for determining to whom the office or post should be offered, the Minister of the Crown or government department shall not act in a way which would contravene Part III if he or the department were the employer for the purposes of this Act.
(3) Regulations may provide for this section not to apply to such appointments as may be prescribed.'.

Amendment No. 12, in clause 1, page 1, line 17, after 'below' insert
'or issued under section (Codes of practice prepared by the Secretary of State) below'.

Amendment No. 43, in clause 4, page 4, line 32, leave out
'in relation to any employment'.

Amendment No. 60, in page 5, line 26, at end insert—
'(2A) Subsection (1) does not apply to any term, condition or privilege of employment comprising the provision of a benefit by the employer if the employer is concerned with the provision (whether or not for payment) of benefits of that description to the public, or to a section of the public which includes the employee in question, unless—
(a) that provision differs in a material respect from the provision of the benefits by the employer to his employees; or
(b) the provision of the benefits to the employee in question is regulated by his contract of employment; or
(c) the benefits relate to training.
(2B) In subsection (2A) "benefits" includes facilities and services.'.

Amendment No. 68, in page 6, line 2, at end insert—
'(5C) Nothing in this section imposes any duty on an employer in relation to a disabled person if the employer does not know, and could not reasonably be expected to know that the disabled person concerned—
(a) is, or may be, an applicant for the employment; or
(b) has a disability.'.

Amendment No. 69, in page 6, line 2, at end insert—
'(5D) Subject to the provisions of this section, nothing in this Part is to be taken to require an employer to treat a disabled person more favourably than he treats or would treat others.'.

Amendment No. 70, in page 6, line 2, at end insert—
'(5E) This section does not apply to employment in any such occupation as may be prescribed by regulations.'.

Amendment No. 108, in clause 28, page 14, line 39, at end insert—
'( ) For the purposes of subsection (2)—
(a) where an unlawful act of discrimination is attributable to a term in a contract, that act is to be treated as extending throughout the duration of the contract;
(b) any act extending over a period shall be treated as having been committed at the end of that period; and
(c) a deliberate omission shall be treated as having been committed when the person in question decided upon it.
( ) In the absence of evidence establishing the contrary, a person shall be taken for the purposes of this paragraph to decide upon an omission—
(a) when he does an act inconsistent with doing the omitted act; or
(b) if he has done no such inconsistent act, when the period expires within which he might reasonably have been expected to do the omitted act if it was to be done.'.

Mr. Burt: Before I speak to the new clauses and amendments, perhaps I may be permitted to say a few words as the proud new Minister with the responsibilities for disabled people. I wish to stress my personal commitment to the aim of eliminating discrimination. I recognise the dedication of so many Members on both sides of the House who have worked tirelessly to help

disabled people to realise the freedom and independence that they rightly deserve. I pay tribute to them all. I am pleased, therefore, to have been given the opportunity to carry the baton. I shall do all that I can to help disabled people achieve their goal.
I relish especially the prospect of shepherding home the Government's Disability Discrimination Bill when it returns from another place in the autumn and bringing forward detailed proposals for implementing its provisions from an early date.
Voluntary organisations of and for disabled people have done an enormous amount to raise the profile of disability and to heighten society's awareness. I am looking forward over the coming months to meeting the representatives of some of these organisations. I look forward especially to meeting disabled people themselves.
The first group of amendments concerns the employment provisions in the Bill. New clause 1 exempts employers with fewer than 20 employees from the requirements in part III. It also gives the Secretary of State power to reduce this figure by means of regulations. Hon. Members who have followed the debates on the Bill in Committee, and on the Government's measure, will know why we think that this exemption is so important. Small employers will not have the personnel or management resources to get to grips with the requirements of disability discrimination legislation. Where they can improve their practices, the Government will seek to persuade them to do so, but they should not be compelled.
New clauses 2 and 3, together with amendment No. 12, give the Secretary of State power to issue codes of practice on the new employment right. This is necessary to ensure that a speedy start can be made to implementing a new employment right rather than waiting for the establishment of a new independent body.
New clause 6 allows the Secretary of State to replace the National Advisory Council on the Employment of People with Disabilities—NACEPD—with a new advisory body. That is not to say that the Government have decided to abolish NACEPD. It rather indicates a desire to have a more flexible statutory framework than the current overly prescriptive framework set down in the Disabled Persons (Employment) Act 1944.
The worth of NACEPD is shown by the fact that the Government have tabled amendments to the Bill with the intention of excluding employment from the remit of Commission/Council No. 27. NACEPD has provided advice on employment and training issues for many years and possesses considerable experience and expertise. It has 18 members in all, including an independent chairman. Three members are appointed to represent workers and three to represent employers. In addition, there are 11 other members. All the members are appointed because of their knowledge and experience of employment and disability issues.
NACEPD has developed considerable expertise over the years and has high standing. It has advised Ministers, for example, on issues such as the Employment Service's code of good practice, the establishment of the network of placing, assessment and counselling teams, the disability symbol, access to work and the medical test for incapacity benefit.
Most immediately, we need NACEPD's help on issues to do with the Government's Disability Discrimination Bill, including the new employment code of practice,


relevant regulations and other detailed matters such as the future arrangements for local advice and the review of the access to work programme.
There is no need to mention training as other powers provide my right hon. Friend the Secretary of State with the power to appoint people to advise her on training matters. It would be permissible to exercise the two powers together if we wanted to cover the same broad area as NACEPD currently does but to have greater flexibility in appointing members.
Committees on the employment of people with disabilities, known as CEPD, do not have any remit when it comes to training. We shall certainly need to look at that when considering whether new local advisory arrangements are needed.
New clause 7 makes a number of important changes to the Disabled Persons (Employment) Act 1944. Chief among them is the repeal of the discredited and failed registration and quota schemes. Giving disabled people rights to fair treatment in all aspects of employment is a better solution than a quota scheme that serves only to stigmatise them.
New clause 8 should be welcomed by the Bill's supporters. It requires Ministers who are making appointments to posts that are not covered by part III to act as if they were subject to the new employment right. That would apply mainly to appointments to posts with no contract of service in which the work is not for the purposes of a Minister or a Department. Examples include certain appointments to non-governmental bodies.
Amendments Nos. 43 and 70 amend clause 4 to allow some occupations to be exempted from the employment right. That would allow occupations with particularly demanding physical requirements to be exempted. An example is the armed forces, as Baroness Hollis accepted when the question of exempt occupations was discussed in another place during consideration of the Disability Discrimination Bill.
Amendment No. 60 is technical and is designed to ensure that the employment rights in part III do not apply to a disabled employee who shops at his employer's store. In that instance he should enjoy the protection of part IV, which protects disabled people from discrimination by those providing goods and services.
Amendment No. 68 again relates to an important point. In the Bill as drafted an employer could be held to have discriminated against a disabled job applicant even though that employer did not know, and could not reasonably have been expected to know, that the person was or might be an applicant or that that person was disabled. In particular, I refer to a situation in which the employer, being unaware of the applicant's disability, fails to make available reasonable accommodation as required by clause 4.
It is simply not reasonable for an employer to be expected to make accommodation for a difficulty arising from a disability unless that employer was or should have been aware of that disability and of the likelihood of its affecting the disabled person in that way. The Bill should not require the making available of reasonable accommodation simply on the hypothetical basis that at some time in future there might be a job application from a disabled person.
The obligation to make such accommodation is confined to cases where it proves necessary to address the particular needs of a specific disabled person. To put it

another way, the Government amendment is designed to ensure that an employer is not penalised simply because he or she is unaware of the relevant facts. For example, if a disabled person failed to attend for a job interview and was subsequently rejected, the employer would not be held to have acted unlawfully if there was no reason why that employer should have known at the time that the person was disabled in a way that was likely to affect his attendance. I do not wish to stray too far from the amendment, but I remind the House that under clause 5 as it stands the employer's freedom to seek information about the health or medical status of a job applicant would be severely limited. The amendment is entirely sensible.
Amendment No. 69 is intended to ensure that positive discrimination in favour of disabled people is not required by the Bill. Amendment No. 108 is technical and is aimed at the time limits for making a complaint to an industrial tribunal. It makes plain the time limit that would apply in cases where discrimination does not arise from a single discriminatory action—for example, where it stems from a term in a contract or from a failure to act, such as not promoting someone.
Our amendments are designed to make the Bill better. As hon. Members are aware, the Government believe that the House should prefer the Government's Disability Discrimination Bill. It is clear and contains a simple definition of disability that will be understood by employers, service providers and disabled people. It is flexible, has regulation-making powers and provides for consultation with all interested parties to make sure that the legislation works effectively in practice. Our Bill is fair and strikes the right balance between the legitimate concerns of business and the equally legitimate concerns and needs of disabled people.

Mr. Dennis Skinner: Is the Minister aware that, notwithstanding the fact that the Government introduced their own Bill after my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes) introduced his, following others that had been introduced in previous Sessions, almost all the disabled organisations that I know have declared their opposition to the Government's Bill; they want my hon. Friend's Bill.
The Minister's speech is an affront to democracy, as were all those others by Tory Members who have been on their feet. We had more than four hours debate. I have been watching the monitor, and it has been occupied by the names of Tory Members and Tory Ministers for the whole morning because they want to filibuster and stop my hon. Friend getting a decent civil rights for disabled people Bill through. It is no wonder that disabled people in wheelchairs have been blocking the traffic on Whitehall. They feel affronted by the Government's Bill.

Mr. Burt: The hon. Gentleman is using the House to make his usual mischief. He knows full well that, from the very outset of this Bill, the Government made it clear that they were not prepared to accept it, and have not suggested at any time that they would allow it enough time to proceed. We are determined that the Disability Discrimination Bill that the Government have introduced, which has been built on many years of patient work by hon. Members on both sides of House, will provide an enormous advance in terms of civil discrimination legislation for disabled people.
The Bill introduced by the hon. Member for Derbyshire, North-East was never going to be able to achieve its objectives. We made it clear from the start that


it would not proceed. I have therefore no problems in saying that the Government's Bill will achieve its aims and objectives for the reasons that I have given: it is clear, flexible and fair, whereas, by comparison, the Civil Rights (Disabled Persons) Bill, as the hon. Member for Bolsover (Mr. Skinner) should know, is unclear, inflexible and unfair.
For those reasons, and for the best purposes of advancing legislation affecting disabled people, the Government's Bill is infinitely preferable. With the best will in the world, therefore, we shall proceed to pass that Bill in due course, with all the advantages that that will have for disabled people, but I am afraid that the Bill before us today is flawed. I have moved a series of amendments at this stage to improve this part of the Bill and, if pressed, I would have to move further amendments later. I should like to close with these amendments just now, and of course I would be willing to listen to the hon. Member for Derbyshire, North-East.

Mr. Barnes: As part of normal parliamentary pleasantry, I welcome the Minister to his new post, although I was disappointed when, in a rush at the end, he just managed to turn up. I thought that we were in for a procedural coup by which his host of amendments would not be moved. I would not have moved my amendments and we could now be into Third Reading, which is what the whole civil rights disabled movement requires.
I have, however, some sympathy with the Minister because he seems to be given all the worst jobs by the Government. He has just come away from having responsibility for Child Support Agency provision and all the difficulties around that, and now his first appearance here in his new role is to stop the Civil Rights (Disabled Persons) Bill.
The Minister said that his amendments were entitled to make the Bill a better Bill, but then, in response to my hon. Friend the Member for Bolsover (Mr. Skinner), he clearly said that that was not what they were about. They are about blocking the progress of this Bill, which the Government fundamentally disagree with. They favour instead their own measure and therefore the amendments are part of the blocking procedure that has taken place, often in Committee corridors, in quiet and not in public.

Mr. Burt: I repeat my earlier remarks. With the best will in the world, I can seek to make the hon. Gentleman's Bill better, but I cannot make it good enough because that is not possible, which is why the Government prefer their own Disability Discrimination Bill.

Mr. Barnes: The Government are not trying to make my Bill a better Bill. They persistently try to turn it into the Disability Discrimination Bill. That is why I raised a point of order about whether a problem exists in relation to the Government importing their measures entirely into my Bill. That is what new clause 1 does. It says that my Bill should not apply to firms with under 20 employees. That is part of the principle included in the Government's Bill and it makes nonsense of my Bill.
Such a proposal might work in terms of the Government's Bill because it is limited, restricted and tends to give what they see as privileges to disabled people, in some way bringing them up here and there.

Mr. Skinner: That Bill patronises disabled people.

Mr. Barnes: It patronises them considerably. My Bill, however, is saying that human rights should apply to disabled people. The notion that civil rights in employment do not apply to a firm with fewer than 20 employees is nonsensical. There may be other arguments, such as reasonableness and cost—and they are contained in my Bill—but to say that whatever the circumstances in a firm, which may be a wealthy firm, employing fewer than 20 people the civil right not to be discriminated against should not operate is offensive to the principles in my Bill.
Time and again on this Bill, the Government have engaged in an ideological battle. They have an alternative position and they have tabled a set of amendments aimed at turning my Bill into their Bill, which has already made progress. Sometimes, they have tabled technical amendments—for example, the Minister referred to amendment No. 108 as being technical. We had reasonable discussions in Committee about technical amendments. Once we could get the former Minister away from the discussion of ideological matters and an attempt to turn my Bill into the Government's Bill, we made some progress.
The matters in my Bill are complex and I accept that some correction is required. For example, the Bill applies to the United Kingdom, yet in two sections it originally referred to Britain. The Government noted that and tabled amendments that I accepted. The Committee Hansard shows that I accepted a host of technical amendments. What I did not accept were ideological amendments based on a different Bill that has already made progress. The majority of hon. Members who served on the Committee were opposed to such ideological amendments, as are the majority of hon. Members in the House. My Bill received a Second Reading by 175 votes to nil, which shows its cross-party support—if only the Whip was taken off and hon. Members given a fair chance to decide between the principles in the two Bills.

Mr. John Austin-Walker: Will my hon. Friend reflect on the fact that there are no exemptions for small firms in the Sex Discrimination Act 1975 and the Race Relations Act 1976? They include the right not to be discriminated against. Will he comment on why disabled people should not have the same right?

Mr. Barnes: That matter is at the heart of the difficulty with my Bill. It would set up a disability rights commission, similar to the commissions set up under the two Acts to which my hon. Friend referred. It would be obnoxious to include in my Bill any limit on a civil right that the proposed commission is intended to safeguard. Amendments in the batch that we are discussing relate to that point.
For example, some amendments would extend the role of the Secretary of State to the production of codes of practice and they reflect exactly the Government's ideology to which I have referred. They are more to do with the Government's Bill and how it is supposed to operate. In that Bill the responsibility for the monitoring of provisions is given entirely to the Secretary of State. That would not be the case under my Bill, where the dynamic for ensuring that civil rights for disabled people become a reality—and that we do not just state general


principles—would be given to the proposed disability rights commission. The Government's second new clause would affect the commission's role.
We are debating the first of 21 sets of amendments and we need to get through all 21 sets and Third Reading within 12 minutes, in the face of implacable Government opposition. They have tabled major amendments, both in this set of amendments and in others, which ties in with their past practice. They have treated the House with utter contempt.
My Bill received its Second Reading by 175 votes to nil. We were then prevented from taking the Bill into Committee by tactics adopted by the Government in preceding Committees. When we finally got the Bill into Committee, it turned out to be the longest serving private Bill Committee for 11 years. It was stopped only because the Minister had achieved his objective of blocking us until today—the last possible practical day on which the Bill could be discussed.
The Minister should not look to that to help shield the Disability Discrimination Bill. It might get him a place in the Cabinet because one was granted to his predecessor precisely because of what he did in getting the Disability Discrimination Bill through and stopping the Civil Rights (Disabled Persons) Bill. The Minister has not got blood on the floor of House as occurred last year in respect of the Bill introduced by my hon. Friend the Member for Kingswood (Mr. Berry). That led to apologies from a Minister and another hon. Member.

Mr. Skinner: My hon. Friend referred to the Bill of my hon. Friend the Member for Kingswood (Mr. Berry), of which this Bill is a replica. The Minister said in reply to me that my hon. Friend's Bill was flawed. My hon. Friend may have heard my sedentary intervention to the effect that the Bill cannot be flawed when it has been tested in the heat of the Commons, in Committee, on Report and on Third Reading once already. Surely when it has been through the mill that many times we can assume that it is ready to be enacted.
My hon. Friend should address his remarks to the Minister's darned cheek, having just got the job—he got it because he served in the Prime Minister's campaign team—in accusing my hon. Friend of sponsoring a flawed Bill when it has been tested in the heat of battle so many times.

Mr. Barnes: This is not my Bill but that of the disability movement. I am carrying the baton for it this year. Previously, other hon. Members have dealt with it.
This is the third time that a measure that is as well tuned as this one has been introduced. The major alteration that I have made to it—to which there have never been any amendments—concerns access to polling stations. I assume that that is therefore acceptable to the Minister. Why was it not supported when a similar amendment was tabled in another place to the Government's Bill?
The amendments attempt to block the Bill and relate to matters such as employment and the role of the Secretary of State. They do not recognise that, in respect of employment, the Civil Rights (Disabled Persons) Bill is an all-embracing measure. The right for people to be treated decently and have proper access to employment that is in the Bill is also applied to refer to goods, facilities, services, premises, new constructions and

polling stations. The Minister has had to table other amendments to try to undermine those provisions, though not those relating to polling stations.
If we had the time for a proper debate we would discover that the same forms of arguments would keep re-emerging. We would move on to access for shops, buildings and accommodation. The Minister would not attempt to improve the Bill, although he disagrees with it, by technical changes but try to turn it into the Disability Discrimination Bill. That should not be done now. I could understand it being done when only my Bill was before the House and the Government took a different position.
However, the Government's Bill has passed from this House to the Lords and is progressing there. Some amendments, like those that we examined earlier, will be made there which will give us a final opportunity to have our say on that Bill. His Bill is cut and dried, apart from the Lords amendments. If the Government's Bill is cut and dried, we should consider this Bill in the context of the principles that inform it because although it has been fine tuned and developed, there will be little technical bugs here and there. However, we are not going to be able to discuss the technicalities or ways to improve the Bill here and there because we are hearing the same argument over and over again. It will now be produced by the new Minister—indeed, he used it in response to my hon. Friend the Member for Bolsover (Mr. Skinner)—and was produced by the previous Minister.
New clauses have been tabled, covering codes of practice and new roles for advisers, whereas this Bill provides that the advisory body and any alterations that need to be made to it must be made in relation to the disability rights commission. The Government, however, have chosen to spend a great deal of time arranging for masses of civil servants to produce amendments. For this particular debate, they have produced 173, of which 140 or so have been selected for debate by Madam Speaker. However, of those 140 amendments, 20 at the most contain concepts that need to be considered to ensure that the Bill is not flawed. We are being denied that opportunity. Instead, we shall have to choose between the big issues and principles on which we have already voted on Second Reading and in Committee. We took many of the relevant decisions when debating the Government Bill.
The approach to be taken by the Minister, who has only just got his new job, is entirely inadequate. I feel sorry for him for being given a terrible task. The last time I saw him I was sympathising with him about the football results at Wembley because he supported Bury and I supported Chesterfield, but my sympathy then is as nothing compared with that which I feel today.
I hope that the Minister will do the honourable thing and say that all the amendments—except those which he deems to be of a technical nature, such as No. 108—will be withdrawn so that the Bill can proceed with only its technical provisions being examined. It is still possible for it to make progress. The Leader of the House should be informed of the situation and make provision for the Bill and its technical amendments to be debated properly instead being condensed into 32 or 33 minutes. Given the volume of new clauses and amendments, it is impossible for the Bill to progress at the moment.
At 2.30 pm, I shall be asked what I want to do. I shall say that I want the Bill to be considered on Monday. It will not be dealt with on Monday, but I want it to be


included among the remaining orders of the day for that day and for every day thereafter. That should give the Government time to revise their position and consider whether the principles of the Bill can be discussed before any firm decision is taken with regard to the Government's Bill. That would enable us to do something honourable instead of our getting involved in the same old game time and time again—the Disability Discrimination Bill, which is being debated in another place, will come back, be squeezed into the skin of the Civil Rights (Disabled Persons) Bill and destroy my Bill in the process.
If we do not debate the principles of the Civil Rights (Disabled Persons) Bill in this Parliament, someone will pick up the Bill in the next Parliament, or someone will promote an equivalent one. All the Opposition parties are committed to such a Bill. I hope that when we finally debate the Lords amendment, even Conservative Members will vote in support of the establishment of a commission.
I now ask the Minister to withdraw the amendments that are of an ideological nature and which represent the divide between us. He has got his way and the Government Bill is making progress; I now ask him to let this Bill progress and give the House the opportunity to decide between the two.

Mr. Burt: The hon. Member for Derbyshire, North-East (Mr. Barnes) spoke with passion and conviction, as always, but he also spoke of honour. This year the Government recognised the concern expressed by many people over a long time to seek to end discrimination against disabled people. The Government took forward those concerns, picked up that baton and moved honourably and decently this year.
On Second Reading on 10 February, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), now the Secretary of State for Wales, made the Government's position clear. The Government fully support the aim of eliminating discrimination against disabled people, but they remain rightly opposed to a Bill that is unclear, inflexible and unfair.

It being half-past Two o'clock, the debate stood adjourned.

Mr. Deputy Speaker: Debate to be resumed what day?

Mr. Barnes: Monday next, Sir, and every day thereafter.

Remaining Orders of the Day

DOGS (FOULING OF LAND) BILL

As amended, considered; read the Third time, and passed.

CHARITIES (AMENDMENT) BILL

Considered; read the Third time, and passed.

WILD MAMMALS (PROTECTION) BILL

As amended, considered; read the Third time, and passed.

VALUING WOMEN'S UNWAGED WORK BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

PROTECTION OF CALVES (EXPORT) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

WORKPLACE INJURY VICTIMS BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

PROTECTION OF ANIMALS BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

TAMPONS (SAFETY) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

SCHOOL TRANSPORT SAFETY BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

SPORTS (DISCRIMINATION)(No. 2) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

MERCHANT SHIPPING (INQUIRIES AND INVESTIGATIONS) AMENDMENT BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

NATURAL DISASTERS (SCOTLAND) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

CIVIL RIGHTS (DISABLED PERSONS)(SCOTLAND) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

WAR WIDOWS AND PENSIONERS (EQUAL TREATMENT) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

SALE OF GOODS (AMENDMENT) BILL [Lords]

Read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Duncan.]

Bill immediately considered in Committee; reported, without amendment.

Bill read the Third time, and passed.

COMMONWEALTH DEVELOPMENT CORPORATION (No. 2) BILL [Lords]

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

GENEVA CONVENTIONS (AMENDMENT) BILL [Lords]

Read a Second time.

Bill committed to a Committee of the whole House.—[Mrs. Roche.]

Bill immediately considered in Committee; reported, without amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.

Bill accordingly read the Third time, and passed, without amendment.

PARDON FOR SOLDIERS OF THE GREAT WAR BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday 20 October.

Youth Service

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

Mr. Simon Hughes: It is rare to take part in item 47 of the day's business, and it is a good thing that some of the other items did not take too long. I am glad to be given the opportunity to raise—not for the first time in my 12-plus years in the House—the state of the youth service.
I welcome the Under-Secretary to his place, although I gather that he is deputising for his newly appointed colleague who has joined the merged Department from the Department of Employment and has the youth service as one of his responsibilities. I, for one, welcome the merger of the two Departments, as a move in the right direction. I have reservations about the youth service's role in that Department, and I shall start by flagging up a traditional failure of the Government in that respect.
Before I arrived on the planet—although I think that you were here, Mr. Deputy Speaker—the Education Act 1944 went through Parliament. [Interruption.] You were not here in Parliament, Mr. Deputy Speaker, but you were on the planet, whereas I was far from even being planned. There was a discussion at that time of the role that the youth service should have within the education service. The reality is that the status of the youth service has remained the same since then, although attempts have been made to amend education legislation to strengthen it.
The Government's wording is that the youth service exists to
promote the planned personal and social education of young people aged 11–25".
The youth service is responsible for that part of the educational provision that is not obligatory or core school provision—it provides the non-school alternative, but it is also a supplement and a complement. Large numbers of young people take advantage of the service. Figures show that about 20 per cent. of young people aged between 13 and 19 are currently participating in the youth service, and about 60 per cent. of young people at some stage make use of the youth service. That adds up to a figure of about 2. 7 million. Up and down the country—whether in local authority youth clubs or in the voluntary sector—the youth service is busy supporting, developing and securing young people's progress from childhood into adulthood, and supplying them with many of the personal skills that they would not learn elsewhere.
I have some knowledge of the subject. Two things drove me into politics, and moving to Southwark was the cause of both of them. One was the incompetence of the Greater London council in housing people around Burgess park as it developed, while the other was the lack of opportunity for young people in inner south London. I found myself—not for the first or last time—working as a youth leader in a youth club, and I saw how valuable the youth service was in playing a part in the triangle of home, formal education and the world.
Young people can learn many things at home, but home is not the place where they want to be doing the learning. For many, it is not school either. Of course, they both have their role, but the place where young people can most effectively develop is somewhere where they can be

with their peer group, where they feel that they are not there under compulsion, where they are not under parental authority and where they can develop their skills in a structured way that responds to their needs. That work has been so well carried out by so many for about 50 years.
The first comment that I put to the Minister to pass on to his colleague concerns ministerial responsibilities. Even after the latest Government reshuffle, they have failed to do some important Government reordering. I hope that even the Conservative Government see this as a good idea that should be implemented before the next election, even though, by doing so, they would steal yet another bit of clothing from the Liberal Democrats in terms of policy.
On the Government Front Bench for the previous debate, we saw the new Minister for Social Security and Disabled People. Over several Administrations, the Government have accepted that there is a case for a Minister based in one Department having general responsibility for issues of concern to disabled people. It would give great encouragement and reassurance, and it would be an effective step, if the Government created a Minister for youth.
I do not argue for a separate Department—that is not credible—but I argue for a Minister with particular responsibility for young people, logically based in the Department for Education and Employment, with a unit of civil servants to back him up. The Minister would be heard as the voice for young people in Government. He could make sure that all Departments across the spectrum responded to the concerns of young people. He could provide a place to which young people could come to express their concerns. Ministers responsible for the youth service have sometimes been not merely not high profile but so low profile that one hardly knew that there was one. We really must beef up the way in which the Government are seen to support young people in general and the youth service in particular.
The second comment that I put to the Minister is that there is a good case for changing the 1944 legislation and giving greater statutory security to the work that the youth service does. Of course one can argue that the youth service is different in character and style from the formal education that young people have to go through. The Government have just announced the extension of education to four-year-olds. We welcome that. It will eventually come to three-year-olds. It will be available to all. The youth service is available to all, but it would feel more secure if it were on a statutory basis.
To put the youth service on a statutory basis is not enough. There is a third hugely important element. On Wednesday this week, there was a lobby of this place by young people in the youth service and youth workers, organised by the Community and Youth Workers Union. It had been organised for weeks. There was a rally at Central hall. The hon. Member for Liverpool, Walton (Mr. Kilfoyle) introduced a ten-minute Bill, which I support, to put the youth service on a statutory basis.
The issue at the forefront of the minds of people who took part in the lobby was not that they wanted a statutory service, although youth workers and many of us who know the arguments would argue for that. The issue was the huge cuts that they have seen in the budget of the youth service, particularly in urban areas. They wanted more financial security. One of the arguments in favour of a greater level of security for the youth service is that it would provide greater security of funding. That point


bridges on to my third point. We really must do more to provide financial long-term security for not only the youth service provided by local education authorities but that provided by other agencies in the voluntary sector.
The Government have been criticised, and there is much public concern, about the relative cuts in the education budget for next year. My colleagues and I have made no bones about the fact that, as a party, we are still committed to an extra £2 billion on education expenditure, even if it means increasing income tax by a penny in the pound. The youth service is one service that needs more money, especially in areas where that has been cut, because of its important work for and with that age group.
A few weeks ago, I visited Dorset to investigate youth service provision. Excellent, out-of-school youth education is undertaken in Weymouth and other places in that rural county. I know of the hugely important role that organised, non-formal education plays in urban Britain, such as in Bradford, where there have been disturbances recently and Luton, which is slightly less urban. It plays a role in managing, challenging and developing the energies of young people and ensuring that, rather than feeling marginalised and alienated, they feel that they have a role to play.
In a country with very high unemployment, a high incidence of absence of skills among young people and a huge sense of alienation, the youth service plays a vital role. Feelings of alienation from the political process are probably as great as ever among young white men, let alone among young white women and young non-white men and women. One criticism of the service is that it is seen as a palliative for dealing with youth crime. Most crime is committed by young people, but it is normally committed by young people on young people.
Happily, the fear of crime is worse than the reality, and we must try to reassure older people on that point. It is also true, however, that although the youth service does not exist to keep young people off the streets and from turning into criminals, in reality, it is far more likely that young people will become involved in criminal activity if their time is not occupied profitably, particularly if they do not have a job or a skill.
The Government do not accept the direct correlation between unemployment and crime. They do not accept the Coopers and Lybrand report results and conclusions. However, it is the general view of those who work in education and the youth service and of parents and the police that there are links. The higher the unemployment and deprivation and the poorer the training, the more likely it is that young people will become involved in criminal activity. In urban areas, therefore, a really effective youth service, which will channel and develop young people separately, is even more important.
Towards the end of last month, the Government made an announcement about the future of the National Youth Agency—a quango that they set up a few years ago to take overall responsibility for channelling funds and backing up the youth service. It was feared that the agency might disappear, but it has not. The Government announced that they wanted to change its status and it will continue, but not as a quango. I hope that the Minister will consider this point.
There are several months before the response to the report is concluded and the real danger of that proposal, which is in general welcome, is that it will allow the Government to wash their hands more cleanly of the

youth service and to tell local authorities that it is up to them, if they want to fund that general organisation to service them, to do so. If the Government get rid of capping later this year, as I have a hunch that they will, local authority budgets will be strapped and the Government must take a lead. They must state the importance of the youth service and say that the non-formal education of young people, to give them skills, abilities and self-esteem, should continue.
I urge the Government to continue to take an interest in the National Youth Agency, and to consider greater funding for the youth service, statutory and voluntary. It is much more cost-effective to do so. For example, the cost per young person in the youth service is much less than the cost of one crime committed by a young person. Indeed, it is not even comparable. I also urge the Government to look again at whether they could secure the youth service in order to guarantee the delivery of the product by legislative requirement.
Finally—I hope that this will be the most seriously pursued—I urge the Government to provide a voice in Government for young people and their services before the next general election. They have done it for disabled people and it could be done with merit for young people. The youth service would then be the direct responsibility of the Minister concerned and the profile of both the youth service and young people would be raised.
I hope that I have put the case in a non-confrontational and positive way. Hundreds of thousands of people feel that the youth service is hugely valuable. They look to the Government to make it much clearer that the Government share that view.

The Parliamentary Under-Secretary of State for Schools (Mr. Robin Squire): As the hon. Member for Southwark and Bermondsey (Mr. Hughes) said, I am standing in for the Under-Secretary of State for Education and Employment, my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice), who is responsible for the youth service. I welcome the tone in which the hon. Member for Southwark and Bermondsey delivered his speech and I will ensure that all his comments are brought to the attention of my hon. Friend the Minister as it is right and proper that he should consider them in depth.
While it is not a normal thing for a Minister to do in responding to an Adjournment debate, this morning I made two trips to the hon. Gentleman's constituency. I should hastily explain that I was travelling to and from the Prime Minister's launch of the sports initiative in Millwall. I shall not strain your patience, Mr. Deputy Speaker, by speaking at length about that initiative this afternoon. I hope that the hon. Gentleman will join me in recognising that its implications for young people in encouraging a wider take-up of sport are significant and read across some of the subjects that he raised.
I also pay tribute to the hon. Gentleman—I hope that he is not too embarrassed by a second tribute—to the long interest that he has taken in youth matters, both before he came to the House and during his parliamentary career. I think that I am right in saying—the hon. Gentleman will appreciate that after a time one's memory fades—that in 1979–80 I sponsored the Youth Service Bill. So certain issues tend to recur from time to time.
I noted the concerns of the youth workers who took part in the lobby of Parliament on 12 July, as did my hon. Friend the Minister responsible. The hon. Gentleman mentioned the merger between the Department for Education and the Department of Employment. It is an exciting merger. Clearly, these are very early days but, in time, the merger will impact across the entire age range in the country. If one had to give the age range that would, in time, logically benefit most from that merger, I suspect that it is the 14 to 19 age range. Significant attention will no doubt be paid to that age range in the next few years and I trust that that will have important benefits for young people.
Just a month ago, the Minister formerly responsible for the youth service, my hon. Friend the Member for Daventry (Mr. Boswell), now Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, reaffirmed the Government's support for the youth service in his speech at the Keele conference on partnership in the delivery and management of the youth service. We are happy to support the partnership between local authorities and the voluntary sector, which are the main providers. Increasingly, however, central Government and outside agencies are dealing with young people.
The Department has an enabling role in relation to the youth service, discharged principally through the National Youth Agency. It directs funding to local education authorities under the "Grants for Education, Support and Training" programme and funds more than 60 national voluntary organisations. Total funding this year will be well over £8 million. Our support for the voluntary sector recognises its role as a key player in the youth service. As a mark of that continuing commitment, a further three-year scheme of grants has been approved to take over from the present scheme when it comes to an end next March.
Our plans for the future of the National Youth Agency were recently announced by my predecessor. It is clear from the review of the NYA that its status and accountability needed to change. It needed to reflect its true position as a body primarily supporting local youth services. Its locally focused work has assumed a much greater significance than was expected when it was first established. It is right that it should become accountable to local providers for that work.
We shall be giving local authorities a major stake in the agency's future. We shall shortly be transferring £1.1 million to them to fund and manage the agency's work in support of local voluntary and statutory youth services. That will be an excellent opportunity for them. Local authorities are examining the arrangements for the future status of the agency. We are confident that they will make good use of the funds transferred so that the NYA continues to support local youth services.
We have made it clear to local authority associations that new arrangements for the agency should reflect the important role of the voluntary youth service sector. We anticipate that support for both the LEA sector as well the voluntary sector will be strengthened by the changes. We are taking steps to ensure that the quality of training received by youth workers is enhanced. We are continuing funding for the agency's work in overseeing the quality of youth work training. That funding will be included in the sum that we are transferring to local authorities, and

this should give them the opportunity to take a longer-term view of appropriate qualifications for youth workers. They will also need to take into account the possible development in this area of national vocational qualifications.
The hon. Gentleman referred to the speech made earlier in the week by the hon. Member for Liverpool, Walton (Mr. Kilfoyle) in support of his ten-minute Bill. The Bill was sponsored by Labour Members but I think that I am right in saying that it has the support of the Liberal Democrat party. I am entitled to ask, "What would the Bill achieve for the youth service?" My answer is, very little. The legal basis for the youth service, if it was in doubt, is not in doubt now. The Education Acts of 1944 and 1992 already place a duty on local education authorities to secure the provision of a youth service. That was relatively recently confirmed by the courts. The courts recognised that each LEA is allowed considerable discretion in how it delivers the service. In fairness, as in a range of other services, there are variations in the nature of the service delivered.
That leads me to the funding and delivery of the youth service. As I have said, it is a matter for each LEA to set its own priorities within its resources. It is not for central Government to determine how local authorities should spend their money. I submit that the local authorities would not want it otherwise. I note claims that LEAs' youth service budgets have been affected by tight local authority spending settlements. As I think everyone in the House knows, the settlement for the current year represented a 1.1 per cent. increase over 1994–95.
There have been scare stories in the past about the effect of past grant settlements on the youth service that have turned out not to be true. Let us consider briefly the trends. Levels of funding in individual authorities can vary from year to year. Let us take a slightly longer view. Between 1990–91 and 1993–94, expenditure on the youth service increased by 13 per cent. in cash terms and 1 per cent. in real terms. That is not the only money that LEAs receive. The youth service also benefits from the single regeneration budget, as it did from the programmes that the SRB replaced.
As a fellow London Member, I would be aware of concerns that the hon. Gentleman would have about funding in the London area. Transitional funding by the Department for the voluntary youth service will come to an end in March 1996 after six years. It was originally intended to run for three years to help voluntary organisations to adjust to funding after the abolition of the ILEA. Obviously, the grant cannot go on indefinitely. The voluntary youth service in London must now look to the London boroughs and the London boroughs grants committee for support.
The funding of the youth service in London local education authorities is still much higher per capita compared with the rest of the country. For example, for young people aged 13 to 19 years the inner London boroughs spend about two and a half times the national average on their youth service. It is interesting to consider the demands in the light of the recent survey by the Office of Population Censuses and Surveys on youth service participation. The Department commissioned that survey, which estimates that the youth service reached 63 per cent. of young people in the 13 to 19 age group at some time in their lives. That is about 2.7 million young people, which is a significant number.
Participation in the youth service is highest among 11 to 15-year-olds, at 31 per cent., and declines sharply after the age of 17. Only 4 per cent. of 18 to 25-year-olds take part in youth service activities. The survey shows that the youth service has to compete with young people's leisure activities and with other organised activities and pursuits. There is no clear evidence that a lack of facilities has caused a decline in participation.
The Government have encouraged participation in the youth service through the youth action scheme. A total of £10 million has been spent over three years on 60 projects in 28 LEAs to develop new kinds of provision for young people who are not normally attracted to the traditional youth service. As the hon. Member for Southwark and Bermondsey said, some of them may be at risk of drifting into crime. Young people will have the opportunity to learn to take responsibility for themselves and to make informed choices for the future. A number of innovative and successful approaches have been developed and good work was reported in a recent Ofsted report. The scheme is being evaluated and a report will be presented in August 1996.
The hon. Member for Southwark and Bermondsey mentioned disturbances last weekend in Luton and more recently in Leeds. The evidence from similar disturbances in the past has not demonstrated that they have been caused or exacerbated by a lack of facilities. Bedfordshire's expenditure on its youth service has increased substantially in recent years—by 15 per cent. in real terms between 1990–91 and 1993–94.
There is a philosophical flavour to this, but my experience, which may be shared by the hon. Gentleman, is that most of those who claim that they have nothing to do have nothing up top. They have chosen to ignore masses of books, places to visit, physical activities, recreational pursuits, self improvement and a wide range of activities that many other people have discovered and which many more will discover in future. Those who claim that it is simply a matter of providing more facilities have not got to the heart of the problem. I do not accuse the hon. Gentleman of taking that view.
We recognise that a good education is not just academic achievement: it is also about encouraging good citizenship and a community spirit and about helping others less fortunate than ourselves. Volunteering is one good way of learning and understanding how to play a meaningful role in society. We have a national strategy for encouraging and developing volunteering and it is set out in the report which my right hon. and learned Friend the Home Secretary launched in June. It is entitled "Make a Difference: an outline volunteering strategy for the UK", and one of the key aims of that strategy is to encourage and enable people to become and remain volunteers. The education service is ideal for providing volunteering opportunities and nurturing volunteers, as already happens with adults.
Schools and colleges represent an important volunteering resource. An enormous variety of work aimed at developing a sense of community and shared values is already undertaken in schools, and many colleges have an active volunteer movement. Young people have the capacity to respond positively to challenges and they respond best when they feel that they have a stake in society and in their own future. They can best be served through actions that address specific issues rather than being treated as some sort of minority group, however important.
Any definition of youth is arbitrary, although I no longer seek to suggest that 51-year-olds come under that definition. Young people are not a separate identifiable group in society. Their needs and circumstances differ. Someone of 25 who is married with children has little in common with a 15-year-old who is still at school. Where a specific area such as youth crime is identified, we are prepared to target young people directly, and there are many examples—

The motion having been made after half-past Two o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at nine minutes past Three o'clock.